Monetary Sector

Currency market and rates of AZN

In January to April 2009, national currency of Azerbaijan - manat, maintained its stability on the backdrop of devaluation of national currencies in some neighboring countries.

In April official exchange rate of the national currency dropped 50 points. Dollar's rate increased from 0.8029 manat per U.S. dollar up to 0.8034 manat per dollar.

Exchange rate of USD increased gradually during the month, but had a tendency to rise. Maximal rate was registered on April 28 at 0.8036 and minimal on April 3 at 0.8028. The oscillation between the maximal and minimal rate made up 8 points

In April, the rate of euro, unlike the US dollar, increased in Azerbaijan through sharp fluctuations. The currency rose by 78 points (from 1.0606 AZN/EUR to AZN/EUR 1.0684). The monthly minimum of rate - 1.0385 EUR/AZN - took place on April 22, monthly maximum of rate - 1.079 EUR/AZN on April 3. The fluctuations between maximal and minimal significance constituted 405 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 in April 2009

The International Bank of Azerbaijan 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.

The top-five leading dealers of organized currency market. also included Bank Respublika, ASB, Pashabank and Texnikabank.

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

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

A total of 28 banks participated in trading sessions at currency section of BBVB in March 2009. In accounting month in "Bourse E-System of Trades" (BEST) 44 trading sessions are conducted and 132 transactions are registered.

The total volume of trading sessions at currency section has made up 237.801 million manat or 296.107 million in dollar equivalent in April on USD/AZN. And also the turnover on tool Swap_USD/AZN_TOD_1 Month has made up 54.223 million manat or 67.4 million in dollar equivalent.

The average rate of dollar to manat on this tool has made up 0.8045 manat.

The turnover on tool EUR/AZN has made 0.104 million manat. In comparison with indicators of March in April the trading sessions at currency section increased by 2.7 times.

So, the average daily turnover in "Bourse E-System of Trades" on USD/AZN reached approximately $13.5 million, while the average volume of each transaction has made $2,243 million.

Exchange rate of national currency on tool USD/AZN_TOD strengthened by 0.1 percent from 0.8029 to 0.8028 manat per dollar. The average sustained rate of manat with respect to dollar constituted 0.8027 manat per dollar, whilst it was 0.804 manat per dollar in March.

Monetary market

The Central 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.

In January-April 2009 the Central Bank spent 20 percent of its currency reserves, or $1,230.4 million for the maintenance of macroeconomic stability. According to the CBA, as of May 1, 2009 the currency reserves of the Bank amounted to 4906.6 million compared to $4961.8 million as of April 1, and $6137 million as of January 1, 2009. Last time the currency reserves of the CBA were fixed at below $5 billion as of June 1, 2008, when they accounted to $4323.4 million.

Currency reserves of the Central Bank of Azerbaijan reduced by $55.2 million, or 1.1 percent in April, to $4.906.6 million, the bank announced. The Central Bank's currency reserves rose by 13.9 percent as compared to last 2008 from $4.306.6 million.

The reserve money as of May 1 amounted to 3742.3 million manat compared to 4963.9 million manat compared to the beginning of 2009. As of May 1, the monetary base in manat was 3679.6 million compared to 4781.3 million manat as of January 1, 2009. In 2009 it fell by 23.04 percent, but increased by 11.8 percent compared to the same period of 2008.

The level of bank reserves since the beginning of the year fell by 60.6 percent, but compared to the same period of 2008 - 45.8 percent. Reduction of reserves is connected with a decline in rate of reservation by 0.5 percent.

The Central Bank of Azerbaijan (NBA) stated in January to April 2009 money mass (M2) reduced by 1348.7 million manat, or 22.18 percent on the backdrop of its rise by 169.1 million manat (3.7 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 4732.3 million manat as of May 1, 2009, compared to 4740.9 million manat as of April 1, 6081 million as of Jan. 1 2009 and 4563.2 million manat as of May 1, 2008.

Cash money supply (M0) dropped by 20.5 percent (848.6 million manat) in January to April, while it increased by 15 percent (429.6 million manat) in an annualized pace. As for May 1, 2009, M0 figure was 3297.1 million manat compared to 3304.1 million manat as of May 1, 4145.7 million manat as of January 1, 2009 and 2867.5 million manat as of May 1, 2008.

As for May 1, 2009, Broad Money Supply (M3) was 6502.4 million manat compared to 6397.4 million manat as of April 1, 8494.2 million manat as f January 1, 2009 and 6549.9 million manat as of May 1, 2008. This figure rose by 1.6 percent in April, but reduced 23.4 percent in January-April, while it decreased by 0.7 percent in an annualized pace.

As of May 1, Transaction money (M1) hit 4109.5 million manat in this period compared to 4088.3 million manat, 5.145 million manat and 3702.5 million manat, respectively. This figure rose by 0.52 percent in April, but reduced by 20.13 percent in January to April, while it increased by 11 percent in an annualized pace.

Parameters of the monetary market, mln AZN

Credit Market

In April 2009, Azerbaijani banks increased crediting of economy by 0.92 percent and decreased by 12.35 percent in January-April and increased by 20.35 percent in annualized pace, a source in the Central Bank of Azerbaijan (NBA) said. Moreover, credit deposits make up 34 percent of GDP in May 1.

According to the CBA, as of May 1, banks issued credits worth 6,278.4 million manats (3,477.1 million manats in national currency and 3,042.2 million manats in hard currency) compared to 6,221.3 million manats to April 1 (3,472.2 million manats in national currency and 2,749.1 million manats in hard currency) and 7,163.2 million manats (3.649 million in national and 3,514.2 million in hard currency) on Jan.1, 2009 and 5,216.7 million manats (2,967.8 million manats and 2,248.9 million manats) on May 1, 2008.

As for May 1, 2009 the share of loans were granted in national currency was 55.4 percent (an increase compared with May 1, 2008 to 17.2 percent) in foreign currency - 44.6 percent (a 24.6-percent increase). Thus 28.4 percent of loans were issued in local currency accounted for by the International Bank of Azerbaijan (IBA). The IBA's share in loans in foreign currency is 53.7 percent.

As many as 200.8 million manats of lending out of the total portfolio are overdue as compared to 195.9 million manats on April 1, 159.8 million manats on Jan.1, 2009 and 108.1 million manats on May 1, 2008. Statistics of the overdue credits doesn't include analogous loans of non-bank credit organization Aqrarkredit.

Short-term credits made up 2,096.9 million manats (including 116.2 million manats of overdue loans) compared to 2,070.2 million manats (including 118.1 million manats of overdue loans) on April 1, 2,295.9 million manats (96.7 million manats of overdue loans) on Jan. 1 in 2009 and 1,834.6 million manats (69.6 million manats of overdue loans) on May 1, 2008. Volume of short-term loans in the economy increased by 1.3 percent in April, by 8.7 percent in January-April and 14.3 percent in the annualized pace. As of May 1, 2009, as many as 39.63 percent of short-term credits and 40.96 percent of overdue credits were in hard currency.  

Long-term crediting made up 4,181.5 million manats (including 84.6 million manats of overdue loans) as compared to 4,151.1 million manats (including 77.7 million overdue loans) on April 1, 4,867.3 million manats (63.1 million manats) on Jan. 1, 2009 and 3.382 million manats (38.5 million manats) on May 1, 2008. Volume of long-term loans in the economy increased by 0.7 percent in April, by 14.14 percent in January-April and 23.6 percent in the annualized pace. As of May 1, 2009, as many as 41.12 percent of long-term credits and 36.05 percent of overdue credits were in hard currency.

Banks basically oriented on the period of 9-12 months, when issuing short-term loans in January-April 2009. Banks prefer long-term credit in term of 1-3 years.

According to the CBA, as of May 1, 2009, the only state bank in the country issued 2.418 million manats of credits with specific weight of 38.5 percent. Private banks issued credits worth 3,684.4 million manats with specific weight of 58.7 percent (increase by 0.63 percent as of March), the rest 2.8 percent accounts for non-bank loan organizations (they issued 176.1 million manats.

As of May 1, 2009, the credit portfolio of the banks with foreign investments made up 1.923 million manats (-0.01 percent) including 336.65 million manats credited by foreign banks.

Of the total lending to the country's economy, 20.1 percent falls to the trade and services (1263.8 million manat), 5.5 percent to energy (344.2 million manat), 5.6 percent - to agriculture (353.5 million manat), 10.1 percent - to the construction (646 million manat), 8 percent - to industrial production (499.7 million manat), 6.8 percent - transport and communications (424.3 million manat), 35.9 percent - to households (2251.5 million manat). The remaining share of lending accounted for community organizations, state and other sectors.

As a result, of the total volume of loans, 97.2 percent falls to the real sector of the economy, 2.8 percent - to the financial sector. Overall, 91 percent of loans were issued to private sector, nine percent - the state

As of 1 May 2009 the average rate on bank lending to the economy in national currency made up 16.25 percent compared to 17.42 percent as of 1 April, 17.45 percent as of 1 January 2009 and 17.89 percent as of 1 May 2008. The figure is 1.64 percent less compared with January-April last year. The average rate on bank lending in hard currency made up 16.98 percent compared to 18.51 percent as of 1 April, 14.52 percent as of 1 January 2009 and 16.61 percent as of 1 May 2008, an increase of 0.37 percent compared to January-April 2008.

As of 1 May, the average rate on bank lending to legal entities in national currency amounted to 13.43 percent compared to 14.8 percent as of 1 April, 14.87 percent as of 1 January 2009 and 16.01 percent as of 1 May 2008. The average rate on bank credits to corporate clients in hard currency equaled 15.05 percent compared to 16.61 percent as of 1 April, 12.37 percent as of 1 January 2009 and 14.37 percent as of 1 May 2008.

As of May 1, the average rate on bank loans to physical entities in national currency amounted to 21.06 percent compared to 21.65 percent as of 1 April, 21.53 percent as of 1 January 2009 and 20.96 percent as of 1 May 2008. The average rate on bank loans to individual clients in hard currency was 20.27 percent compared to 22.26 percent, 21.52 percent and 20.89 percent respectively.

Banking sector

Positive tendency has been observed since April in the volume of deposits attracted by banks. Though drop in deposits was 6-7 percent in January to March, the situation changed in April, and it was possible to compensate part of the drop.

Depositary base of Azerbaijani banks increased 3.7 percent in April, dropped by 26.3 percent in January-April and by 13 percent in annualized pace.

The CBA said as of May 1, total sum of bank deposits and deposits by juridical entities and individuals hit 3.205 billion manat compared to 3.091 billion manat in April 2009 and 4.348 billion manat in January 2009 and 3.682 million manat in early May 2008. About 1.435 million accounted for manat and 1.770 million manat for currency.

In April, deposits by individuals increased 5.25 percent and juridical entities - 1.6 percent. The reduction of deposits by individual clients hit 2 percent and corporative clients - 45.2 percent in January-April 2009. Deposits by individuals increased by 17.1 percent, while deposits by corporative clients dropped by 35.9 percent in the annualized pace.

As of May 1, the deposits of physical persons hit 1.865 million manat from the previous 1.772 billion manat in April 1 and 1.903 million manat in January and 1.593 in May 1, 2008.  Deposits of legal entities totaled 1.339 billion manat in early May compared to 1.318 billion manat as of April 1 and 2.444 billion manat as of January 1 and 2.088 million manat as for May 1, 2008.

As of May 1, the deposits by individuals in national currency hit 661.9 million manat and 1.174 million manat in hard currency, by juridical entities - 744.1 million manat and 595.6 million manat in hard currency.

The CBA said as of May 1, 2009, the percentage of deposit account and deposits in manat hit 43.4 percent, compared to 47.6 percent in Jan. 1, 2009. Individuals and juridical entities prefer to deposit in manat for 1-5 years and 9-12 months in commercial banks. Out of the total sum of deposits and deposits in manat account for deposits for the period of 9-12 months and 1-5 years. As of Jan. 1, 2009, the figure was 77.7 percent and 81.7 percent in April 1, 2009.

The CBA report indicates that structure of physical entities include 1.670.2 billion manat of resident's savings and 195.6 million manat of on-residents' savings.

Considerable part of deposits accounted for Baku. In particular, as of January to April 2009, 93 percent of all community savings were placed in banks operating in Baku, and 7 percent in banks and its branches active in regions.

Thus, 20.6 percent of savings in Baku are poste restante, 79.4 percent are deposit accounts. Meanwhile, 33.7 percent of savings in regions are poste restante, and 66.3 percent are deposit accounts. Population in regions prefers savings in national currency. As many as 64.3 percent of savings are in national currency, whereas as of beginning of 2009 the figure was 81.9 percent.

Out of the total amount of deposits and deposits in national currency is 40 percent, compared to 41.5 percent as of early 2009, and in foreign currency - 60 percent, compared to 58.5 percent respectively.

As of May 1, 2009 the average rate of bank deposits in the national currency comprised 11.59 percent compared to 11.46 percent as of April 1, 11.61 percent as of the beginning of the year and 11.51 percent as of May 2008. The average rate of banking deposit in foreign currency is 10.84 percent compared with 11.28 percent, 7.96 percent and 9.51 percent respectively.

As of May 1, 2009 the average rate of bank deposits of physical entities in the national currency comprised 12.42 percent compared to 12.41 percent as of April 1, 12.54 percent as of Jan. 1, and 12.76 percent as of May 1, 2008. The average rate of banking deposit of individual client in foreign currency is 12.51 percent compared to 12.62 percent, 12.43 percent and 12.7 percent respectively.  

As of May 1, 2009 the average rate of bank deposits of legal entities in the national currency comprised 9.49 percent compared to 9.19 percent as of April 1, 9.48 percent as of Jan. 1, 2009 and 9.69 percent as of May 1, 2008. The average rate of banking deposit of corporate client in foreign currency is 6.4 percent compared to 6.78 percent, 5.4 percent and 5.61 percent respectively

In accordance with the Central Bank's statistics, as of May 1, 2009 assets of the Azerbaijani banks made up 9.999.2 million manat as compared to 8.815 million manat as of April 1, 10.273.5 million manat as of Jan. 1, 2009 and 7.672.2 million manat as of May 1, 2008. The bank asset lower than 9 billion manats was fixed on August 1, 2008 (8.811.5 million manat). Thus, the banks' assets rose by 17.3 percent in an annual calculation as of May 1, 2008.

As of May 1, the total capital of banks amounted to 1.583.3 million compared to 1.557.6 million manat as of April 1, 1.491.7mln manat as of January 1, 2009 and 1.146 million manat as of May 1, 2008. In April, the aggregate capital dropped 1.7% compared to 0.7% drop in March and 6.2% - beginning of the year. In annual calculation (as of May 1, 2008) growth was 38.2%.

As of May 1, total capital of Azerbaijani banks made up 1.816.84 million manat as compared to 1.787.22 million manat as of April 1 and 1.704.87 million manat as of Jan. 1, 2009.

According to the CBA, on the backdrop of normative requirements to minimal amount of capital on Azerbaijani banks in the amount of 10 million manat, as of May 1, 2009, one bank had an aggregated capital up to 5 million manat, 4 banks - from 5 to 10 million manat, 41 banks - over 10 million manat.

By the beginning of 2009, one bank had an aggregated capital up to 5 million manat, 2 banks - up to 10 million manat, 42 banks - over 10 million manat.

According to the CBA, by the control date the banks' net profit until the taxation made up 115.35 million manat compared to 80.88 million manat as of April 1, and 246.03 million manat as of Jan. 1, 2009.

In this period 39 banks had 112.63 million manat of net profit amid loss of 7 banks in the amount of 7.77 million as compared to 37 banks with 87.07 million of net profit and loss of 9 banks for 7.41 million manat as of April 1, and 38 banks with 192.08 million manat of net profit amid loss of 8 banks in the amount of 7.4 million manat as of Jan. 1.

As of May 1, undistributed profit of banking sector made up 104.86 million manat as compared to 79.66 million manat as of April 1, and 184.68 million manat as of Jan. 1, 2009.

As of May 1, 2009 net percent profit of banks made up 194.34 million manat, whilst non-percent loss was 46.68 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.

Stock exchange

In April 2009 the Ministry of Finances held seven auctions on placement of T-bills in the amount of AZN 73 million, of which AZN 46.269 million was placed. Special weight of placement was 63.4 percent. The average sustainable profitability on the results of shareholders was 6.12 percent per year. One deal was registered at the secondary market amounting to AZN 0.949 million.  

The Central Bank held four auctions on the placement of short-term T-bills with the total of amount of AZN 19mln. The emitter succeeded to place the entire emission. The average sustained profitability ratio on the results of auctions 2.4 percent per year. No deal was concluded at the secondary market in April.

In April AZN 1.62 mln was placed at the corporate shares market at 18 deals, while at the secondary market on short-term notes the placement amounted to AZN 356.792.8 mln at 263 deals.

No deals were concluded in initial placement of corporate bonds. At the secondary market two deals in foreign currency amounted to $10,000 and in national currency 2.077 million manat.

The total turnover of transactions for January-April 2009 on all instruments on Baku Stock Exchange made AZN 2,189.884 mln. This indicator is lower than the same one for the analogous period of the last year by 22,8%. 

Principal decrease applies to the government securities market, i.e. Notes primary and secondary market down to 74,41% and 61,35% respectively. Besides number of Repo transactions reduced to 15,0% and in general, government securities market went down till 26,0%.

In spite of absence of transactions on corporate securities primary market and decrease of corporate bonds till 27,5% on secondary market, corporate securities market grown up to 3,59.

The largest growth was registered in the secondary market of equities that increased more than 316 times. The primary market of equities grew by more than 5 times. It should be noted that in addition to the volumes the number of transactions considerably went up both in the secondary and primary markets of equities from 135 to 1023 and from 63 to 136 respectively. 

Besides growth of the exchange activity was observed in government bonds secondary market, i.e. by 110 times.

Comparative table on the results of auctions on all instruments on the BSE

(January-April 2009)

In January-April 2009, the securities market of Azerbaijan hits 2.21 billion manats, out of which 18.9 percent accounted for primary market and 81.1 percent for secondary market, the State Securities Committee said.

The securities market dropped by 15 percent compared to the same period in 2008. The main reason for recession was the reduction of sterilizing tools of the Central Bank of Azerbaijan due to softening of money policy.

In January-April 2009, a total of 419.5 million manats securities were issued, out of which 44 percent were issued by CBA.

Securities of the secondary market totaled 1.795 million manat, out of which 84.6 percent accounted for CBA repo and reverse-repo operations.

The turnover at the securities market surpassed the index of 2008 to 133.6 million manats as for four months of 2009. A total of 61 percent accounted for the primary market and 38 percent for secondary market.

A total of 81.1 million manats shares were issued. This represents an increase of 4.7 times compared to the mentioned period in 2008. The turnover at the secondary market hits 52.5 million manats.

The total debt securities market amounted to 2.08 billion manat, which is 26.7 percent less than the same period last year.

Out of the total amount of debt securities market 14.7 percent accounted for state bonds and 85 percent for short-term bonds of CBA.

The amount of implemented repo and reverse-repo operations with short-term notes of CBA amounted to 1.51 billion manat, which is 16 percent less than this figure for the same period last year.