Monetary Sector

The National Bank of Azerbaijan (NBA) cut interest rates two percent on March 2.

Interest rates will total three percent.

The upper limit of the percentage corridor was reduced from 10 to 8 percent. Obligatory reserves were reduced in manat and foreign currency from three to 0.5 percent.

On the backdrop of the global economic crisis, the NBA is easing the 2009 monetary policy to maintain macroeconomic balance, financial stability and economic activity.

The bank took similar steps last year to reduce inflation.

The NBA cut interest rates from 15 to 5 percent from October 2008 to February 2009.

As a result, country's economy was provided with additional liquidity in the amount of $900 million, or 20 percent of the money in circulation. Thanks to actions taken in economy there is enough volume of assets in the country, namely in cash, enabling to carry out calculations, public budget liabilities, as well as repay foreign debts.

Currency market and rates of AZN

The CBA will not allow devaluation of national currency.

In March 2009, official exchange rate of the national currency rose 24 points. Dollar's rate decreased from 0.8052 manat per U.S. dollar up to 0.8028 manat per dollar.

Exchange rate of USD increased gradually in the beginning of the February, but stably dropped in mid-February, again making an attempt to increase at the end of the month. Maximal rate was registered on March 2 at 0.8054 and minimal on March 19 at 0.8026. The oscillation between the maximal and minimal rate made up 28 points.  

In March, the rate of euro, unlike the US dollar, increased in Azerbaijan. The currency rose by 386 points (from 1.0256 EUR/AZN to EUR/AZN 1.0642) through sharp fluctuations. The monthly minimum of rate - 1.006 EUR/AZN - took place on March 4, monthly maximum of rate - 1.0747 EUR/AZN on March 19. The fluctuations between maximal and minimal significance constituted 737 points.

On results of trades in currency section of Baku Interbank Currency Exchange defined five banks - leading operators of exchange market of easily converted currency on February 2009

Joint-stock Commercial Bank "Bank Respublika" has headed five bank-leaders of exchange currency market in accordance with shares of transactions concluded by him in the total turnover of trades of currency section. Unibank topped this list in December and January. CJSC "Bank Standard", Capital Bank, Open Joint-stock, Bank Silkway and ASB were also included in the number of the leading dealers of organized currency market.

In accordance with it below is the list of banks - the leading operators of exchange market of easily converted currency in March 2009:

In the data are not considered transactions of the National Bank of Azerbaijan

A total of 34 banks participated in trading sessions at currency section of BBVB in March 2009. In accounting month in "Bourse E-System of Trades" (BEST) 30 trading sessions are conducted and 239 transactions are registered

The total volume of trading sessions at currency section has made up 645,629 million manat or 802,856 millions in dollar equivalent in accounting month on USD/AZN. And also the turnover on tool Swap_USD/AZN_TOD_1 Month has made up 73.6 million manat or 91.4 millions in dollar equivalent.

The average rate of dollar to manat on this tool has made up 0.8056 manat.

The turnover on tool EUR/AZN has made 8,096 million manat. In comparison with indicators of February in March the trading sessions at currency section increased by 1.9 times.

So, the average daily turnover in "Bourse E-System of Trades" on USD/AZN reached approximately $53.5 millions, then that the average volume of each transaction has made $3,359 million.

In January to March the amount of trading sessions at BBVB with the foreign currency made up 1.007 billion manat, or 1.251 billion manat in dollar, exceeding the similar figures of the first quarter of 2008 by 0.466 billion manta or 1.9 times

Exchange rate of national currency on tool USD/AZN_TOD strengthened by 0.3 percent from 0.8052 to 0.8028 manat per dollar. The average sustained rate of manat with respect to dollar constituted 0.804 manat per dollar, whilst it was 0.8063 manat per dollar in February.

Monetary market

National Bank of Azerbaijan considers it necessary to issue money that will help maintain high business activity in the country. The need for the new issuance of money is that the Azerbaijani banks that have high liquidity, will expand $1.5 billion this year for the payment of their obligations under external loans. By January, they re-paid about $1.1 billion on external borrowing. Withdrawal of such amounts of money from the turnover will negatively affect the real sector.

The Central Bank of Azerbaijan (NBA) stated in January to March 2009 money mass (M2) reduced by 1.340.1 million manat, or 22.04 percent on the backdrop of its rise by 312.7 million manat (7.06 percent) in an annual calculation. In December 2008 rise was 568.2 million manat (10.3 percent) and in 2008 - 1.985.1 million manat (48.5 percent).

M2 was 4.740.9 million manat as of April 1, 2009, compared to 5264.8 million manat as of March 1, 6.081 million as of Jan. 1 2009 and 4428.2 million manat as of April 1, 2008.

Cash money supply (M0) dropped by 20.3 percent (841.6 million manat) in January to March, while it increased by 20.8 percent (569.6 million manat) in an annualized pace. As for April 1, 2009, M0 figure was 3.304.1 million manat compared to 3.666.9 million manat on March 1, 4.145.7 million manat - on Jan. 1 2009 and 2.734.5 million manat - on April 1, 2008.

As for April 1, 2009, Broad Money Supply (M3) was 6.397.4 million manat compared to 7.328.4 million manat on March 1, 8.494.2 million manat - on Jan. 1, 2009 and 6.341.3 million manat - April 1, 2008. This figure dropped by 12.7 percent in March and by 24.7 percent in January-February, while it increased by 0.9 percent in an annualized pace.

As of April 1, Transaction money (M1) hit 4.088.3 million manat in this period, compared to 4.528.5 million manat, 5.145 million manat and 3.602.5 million manat, respectively. This figure dropped by 9.7 percent in March, by 20.54 percent in January to March, while it increased by 13.5 percent in an annualized pace.

Parameters of the monetary market, mln AZN

Credit market

In March 2009, Azerbaijani banks decreased crediting of economy 7.04 percent, a-6.6-percent drop from same month of 2008, and increased annualized pace by 39.07 percent.

In March 2009, Azerbaijani banks decreased crediting economy by 7.04 percent, in January to March by 13.15 percent and in annual calculation increased by 26.14 percent. Cut in lending was linked with steps taken by the NBA at the end of 2008, increasing security for loan from 120 to 150 percent. The problem is that banks carefully approach the market, due to increasing risks and need for time to estimate risks.

As of April 1, banks issued credits worth 6.221.3 million manat (3.472.2 million manats in national currency and 2.749.1 million manat in hard currency) compared to 6.692.5 million manat (3.553.6 million manat in national currency and 3.139 million manat in hard currency) on March. 1, 7.163.2 million manat (3.649 million manat and 3.514.2 million, respectively) on Jan. 1, 2009 and 4.932.1 million manat (2.763.3 million manat and 2.168.8 million manat) on April 1 in 2008.

As many as 195.9 million manat of lending out of the total portfolio are overdue as compared to 183.4 million manat on March 1 and 159.8 million manat on Jan.1, 2009, as well as 102.8 million manat on April 1, 2008. Statistics of the overdue credits doesn't include analogous loans of non-bank credit organization Aqrarkredit.  

Short-term credits made up 2.070.2 million manat (including 118.1 million manat of overdue loans) compared to 2.042.3 million manats (110.3 million manat in overdue debts) on March 1, 2.295.9 million manat (including 96.7 million manat of overdue loans) on Jan. 1, 2008 and 1.719.2 million manta (66.3 million manat overdue loan) as of april 1. In March the amount of short-term loan in economy reduced by 1.4 percent, in January to March by 9.8 percent and in annual calculation rose by 20.42 percent. As of April 1, 38.8 percent of short-term credit and 37.1 percent of overdue credits were in hard currency. 

Long-term crediting made up 4.151.1 million manat (including 77.7 million manta of over loan) compared to 4.650.2 million manat (including 73.2 million manta of overdue loan) on March 1, 4.867.3 million manat (63.1 million manats) as of Jan. 1, 2009 and 3.212.9 million manat (36.4 million manat) on April 1, 2008. Amount of long-term crediting reduced by 10.7 percent in March, by 17.7 percent in January to March, and rose on annual calculation by 29.2 percent. As of April, 46.9 percent of long-term credits and 35.9 percent of overdue credits were in hard currency.

According to the NBA, as of April 1, 2009, the International Bank of Azerbaijan, the only state bank in the country, issued 2.376.6 million manat of credits with specific weight of 38.2 percent (16.7-percent decrease in March). Private banks issued credits worth 3661.2 million manat with specific weight of 58.8 percent (0.16-percent increase) and the remained 2.9 percent falls to non-banking loan organizations. They issued 183.5 million manat loans.

On April 1, the credit portfolio of the banks with foreign investments made up 1.923.2 million manat (-14.2 percent) including 330.52 million manat credited by foreign banks.

Of the total lending to the country's economy, 20.4% fell on transport sector (1.268.7mln manat), 5.4% on energy (335.0mln manat), 5.6% - agriculture (349.3%), 10.1% - construction (626.8mln manat), 7.5% - industrial production (466.2mln manat), 6.7% - transportation and communications (416.6mln manat), 36.2% - households (2.269.3mln manat). The remaining share of lending accounted for public organizations, state and other sectors.

As of April 1, 2009, the average rate on banking crediting in economy in national currency made up 17.42 percent as compared to 17.37 percent as of March 1, 17.45 percent as of Jan. 1, 2009 and 17.71 percent as of April 1, 2008.

Average rate of banking crediting in hard currency made up 14.8 percent as compared to 14.7 percent as of March 1, 14.87 percent as of Jan. 1, 2009 and 15.85 percent as of April 1, 2008.

As of April 1 average rate on banking crediting by legal entity in national currency constituted 14.8 percent as compared to 14.7 percent as of March 1, 14.87 percent as of Jan. 1, 2009 and 15.85 percent as of April 1, 2008. Average rate on banking credit of corporate client in hard currency constituted 16.61 percent as compared to 15.31 percent as of March 1, 12.37 percent as of Jan. 1, 2009 and 16.2 percent as of April 1, 2008.

As of April 1 average rate of banking crediting by physical entity in national currency made up 21.65 percent as compared to 21.66 percent as of March 1, 21.53 percent as of Jan. 1, 2009 and 20.84 percent as of April 1, 2008. Average rate on banking credit of individual client in hard currency made up 22.26 percent as compared to 20.33 percent, 21.52 percent and 21.06 percent respectively

Banking sector

Depositary base of Azerbaijani banks reduced 15.5 percent in March, a 14.3-percent drop from the same indicator of 2008, the Central Bank of Azerbaijan (CBA) said.

The CBA said as of April 1, total sum of bank deposits and deposits by juridical entities and individuals hit 3.091 billion manat compared to 3.657 billion manat in March 2008 and 3.606 billion manat in April 2008. About 1.436 million accounted for manat.

AZN 1.436.8 million of the sum fell on money reserves (-10.1 percent in March) and the remaining part (AZN 1.534.3 million) on foreign currency (-19.7 percent).

As of April 1, 2009, the amount of deposits of physical entities in the banks made up 3.091.1 million mantas as compared to 3.657.8 million mantas as of March 1, 4.348.5 million manats as of Jan. 1 and 3.606.7 million manats as of April 1, 2008.

In March, deposits by individuals fell 2.2 percent and juridical entities - 28.5 percent. In January to March deposits of individual clients reduced by 6.9 percent and deposits of corporate clients by 46.1 percent. The growth of deposits by individual clients hit 11.7 percent and corporative clients - 34.7 percent.

As of April 1, the deposits of physical persons reduced 1.772 million manat from the previous 1.813 billion manat in March and 1.587 million manat in April 2008. Deposits of legal entities totaled 1.318 billion manat compared to 1.844 billion manat as of March 1 and 2.019 billion manat as of April 1, 2008.

As of April 1, 2009 the amount of deposits of physical entities totaled AZN 1.318.7 million manats as compared to AZN 1.844.4 mln as of March 1, 2.444 million manats as of Jan. 1 and 2.019.6 million manat as of April 1, 2008.

As of April 1, 2009, 661.9 million manat of deposits and savings of physical persons was realized in national currency and 1.110.9 million manat in hard currency. Some AZN 774.9 million of legal persons' deposits was realized in manat and 543.5 million in hard currency.

As of April 1, 2009 the average rate of bank deposits in the national currency comprised 11.46 percent compared to 11.35 percent as of March 1, 11.61 percent as of the beginning of the year and 11.51 percent as of March 2008, the National Bank of Azerbaijan said. The average rate of banking deposit in foreign currency is 11.28 percent compared with 9.01 percent, 7.96 percent and 9.84 percent respectively.

As of April 1, 2009 the average rate of bank deposits of physical entities in the national currency comprised 12.30 percent compared to 12.54 percent as of Jan. 1 and 12.48 percent as of April 1, 2008. The average rate of banking deposit of individual client in foreign currency is 12.62 percent compared to 12.35 percent, 12.43 percent and 12.58 percent respectively.  

As of April 1, 2009 the average rate of bank deposits of legal entities in the national currency comprised 9.19 percent compared to 9.1 percent as of March 1, 9.48 percent as of Jan. 1, 2009 and 9.99 percent as of April 1, 2008. The average rate of banking deposit of corporate client in foreign currency is 6.78 percent compared to 5.6 percent, 5.4 percent and 5.58 percent respectively

In accordance with the Central Bank's statistics, as of April 1, 2009 assets of the Azerbaijani banks made up 8.815 million manat as compared to 9.479.1 million manat as of April 1, 10.273.5 million manat as of Jan. 1, 2009 and 7.415.9 million manat as of April 1, 2008. The bank asset lower than 9 billion manats was fixed on August 1, 2008 (8.811.5 billion manta). Thus, the banks' assets rose by 18.9 percent in an annual calculation as of April 1, 2008.

As of April 1, the total capital of banks amounted to 1.557.8 million compared to 1.567.8mln manat as of March 1, 1.491.7mln manat as of January 1, 2009 and 1.109.4mln manat as of April 1, 2008. In March, the aggregate capital dropped 0.7% compared to 3.3% growth in February and 4.4% - beginning of the year. In annual calculation (as of April 1, 2008) growth was 40.4%.

As of April 1, 2009 cash turnover constituted 9.263.8 million manat, including 3.422.2 million manat in March, on the backdrop of income operations for 5.069 million manat (+27.1 percent compared to January to March 2008) and expenditure operations for 4.194.8 million manat (+5 percent). Over 2008 the turnover made up 40.608.7 million manat on the backdrop of income operations for 19.567.8 million manat (+19.6 percent compared to 2007) and expenditure operations for 21.040.9 million manat (+18.2 percent), and emission reached 1.512.63 million manat (+3.5 percent compared to 2007) of 5.5 percent of expenses.

In January to March cash remainder on income operations made up 163.7 million manat and expenditurea - 183.7 million manat. As of 2008 they comprised 122.8 million manat and 162.3 million manat repectively. In January to March 2009, 854.2 million manat was directed to reserve.

In January to March the average daily amount of incoming operations составлял 56,322 manat, expenditure - 46,609 manat amid absence of emission. In 2008 average annual amount of incoming operations made 53,464 manat (+19.27 percent as of 2007), expenditure - 57,489 manat (+17.9 percent), and emission - 4,133 manat (+3.19 percent).

As of April 1, 2009 the Central Bank of Azerbaijan stated the profits of Azerbaijani banks in the amount of $100.7 million as compared to $99.4 million as of March 1 and $307.2 million as of Jan. 1, 2009.

According to the CBA, by the control date the banks' net profit until the taxation made up 80.88 million manat compared to 80.01 million manat as of March 1, 55.31 million manat as of Feb. 1 and 246.03 million manat as of Jan. 1, 2009.

In this period 37 banks had 87.07 million manat of net profit amid loss of 9 banks in the amount of 7.41 million as compared to 38 banks with 85.57 million of net profit and loss of 8 banks for 6.59 million manat as of Match 1, 35 banks with 62.56 million manat of net profit amid loss of 11 banks in the amount of 8.03 million manta as of Feb. 1 and 38 banks with 192.08 million manat of net profit amid loss of 8 banks for 7.4 million manat as of Jan. 1, 2009. As of April 1, undistributed profit of banking sector made up 79.66 million manat a compared to 78.98 million manat as of March 1, 54.53 million manat as of Feb. 1 and 184.68 million manat as of Jan 1, 2009.

As of April 1, 2009 net percent profit of banks made up 142.89 million manat, whilst non-percent loss was 37.72 million manat. Net percent profit of banks made up 532.74 million manat in 2008, 309.76 million manat in 2007, net non-percent loss was 73.92 million manat and 28.81 million manat respectively.

The number of profitable banks in Azerbaijan increased from 38 to 37 in March 2009, though the figure increased by 1 bank as compared to March 2008.

Revenues in the sector increased by over 1.7 times compared to April 1, 2008 to 79.66 million manat. Total amount of banks' revenues increased by 0.9 percent in March.

The number of unprofitable banks increased by one compared to February and was the same compared to early 2009. Nine banks lost 7.41 million manat, which is by 6.9 percent more than the figure for April 1, 2008.

Financial Results of Bank Activities (After Tax Payments) with Million Manat:

The capitalization of the banking sector of Azerbaijan grew one percent in March 2009, and 4.8 percent compared with the beginning of the year, the Central Bank of Azerbaijan (CBA) said on May 5. The total capital of banks is 1 787.22 million manat.

According to statistics provided by the Central Bank, as of 1 April 2009, the capital of 42 banks exceeded 10 million manat compared to 43 banks as of the beginning of the year. Accordingly, the share of this category of banks in the total capital of all banks fell from 98.6 percent to 98 percent.

Three banks with the special weight of 1.7 percent have formed their capital between AZN 5 and 10 million, one bank - AZN 3.5 and 5million.

46 banks held a license for banking activities in the country. Their number reduced as a result that the license of two banks, Poctbank and Atlantbank, is invalid. The NBA liquidated the licenses of these two banks from 9 July. Permission for banking activity was provided to Nakhchivanbank and Azfinans Bank. Three banks are under process of liquidation. 

Currently 23 banks operate in Azerbaijan with the participation of foreign capital. In seven of them the share of foreign capital is 50 to 100 percent, in 14 banks - up to 50 percent, and there are two local branches of foreign banks.

The number of banks functioning abroad is 9, including 6 representations, two subsidiaries and one branch. Also four representations of foreign banks function in Azerbaijan.

Stock exchange

In March 2009 the Ministry of Finances held four auctions on placement of T-bills in the amount of AZN 44 million, of which AZN 15.94 million was placed. Special weight of placement was 36.2 percent. The average sustainable profitability on the results of shareholders was 6.1 percent per year. A total of 21 deals at the secondary market totaled AZN 47.78 million.  

The National Bank held three auctions on the placement of short-term T-bills with the total of amount of AZN 45mln. The emitter succeeded to place AZN 18.039 mln, or 40.1 percent of the entire emission. The average sustained profitability ratio on the results of auctions 2.8 percent per year. A total of four deals worth AZN 5.456 million were held at the secondary market in March.

In March AZN 6.299 mln was placed at the corporate shares market at 51 deals, while at the secondary market on short-term notes the placement amounted to AZN 6.874mln at 167 deals. No deals were concluded in initial placement of corporate bonds. At the secondary market seven deals in foreign currency amounted to $0.15 mln.

The securities market in Azerbaijan amounted to 1.88 billion manat in the first quarter of 2009, which major part consisting of loan market tools.

The share of initial market made up 18.5 percent of the total market and 81.5 percent - share of secondary market.

In the first quarter the stock market demonstrated itself as stable and transparent on the background of global financial crisis. Institutional strengthening has been observed in the structure of the market. In this period activity in the market of shares increased, whilst the transactions in the secondary securities market overdrew the initial market for their activity

The securities worth 347.7 million has been issued in that period and 47 percent of them accounted for the notes of the Central Bank.

In this period the amount of secondary securities market rose 1.7 times as compared to similar period of 2008 to 1.536 billion manat, with 82.4 percent accounting to operation with repo and reverse repo with notes of the Central Bank.

In the first quarter the market of shares rose by 4.7 times as compared to the similar period of the last year. The market of shares amounted to 129 million manat, with 62 percent accounting for the share of initial market and 38 percent on share of secondary market. The stock issue was done through the financial sector. The stock issue rose by six times to 79.5 million manat.

Over the first quarter of 2009 total amount of the secondary market made up 47.8 million manat, increasing the similar figure of the last year by 3.5 times.

Share trading at the secondary market of the Baku Stock Exchange rose by 662 times to 28.5 million manat. Some 92 percent of share in circulation at the secondary market accounted for financial sector, 4 percent on refinery sector and 2.5 percent on transport.