Monetary sector ( january - july 2009 )

In July, Azerbaijan President Ilham Aliyev signed a decree making amendments and additions to the Law on National Bank, a project of which was approved by Parliament on June 19. The Law on National Bank is amended to increase the flexibility of the Central Bank and tools for rapid response in the context of the ongoing global crisis and to solve problems with a move from crisis situations.

Currency market and rates of AZN

In July official exchange rate of the national currency dropped 1 point. Dollar's rate increased from 0.8042 manat per U.S. dollar up to 0.8043 manat per dollar.

Exchange rate of USD increased gradually during the month. Maximal rate was registered on July 13 at 0.8044 and minimal on June 17 at 0.8041. The oscillation between the maximal and minimal rate made up 3 points

In July, the rate of euro also increased in Azerbaijan. The currency rose by 73 points (from 1.1289 AZN/EUR to AZN/EUR 1.1362). The monthly minimum of rate - 1.1177 EUR/AZN - took place on July 9, monthly maximum of rate - 1.1452 EUR/AZN on July 28. The fluctuations between maximal and minimal significance constituted 275 points

As a result of currency auctions on USD/AZN_TOD in July 2009, Baku inter-bank currency exchange determined 5 banks-leaders of currency stock exchange market in accordance with share of concluded deals headed by the International Bank of Azerbaijan.

Unibank joint-stock commercial bank, the International Bank of Azerbaijan, AGBank and Texnika Bank stock-commercial bank were the leading dealers of organized currency market.

A list of banks-leading operators of exchange market of July 2009 is indicated below:

* Deals of the Azerbaijani Central Bank were not indicated in data.

Roughly 15 banks participated in BBVB auction in July 2009. Roughly 46 trade sessions were conducted in report month in Exchange E-auction system. Total volume of currency USD/AZN auction hit 47.562 million manat or $59.175 million in report month.

Total amount of auctions in currency decreased 37.9 million manat or 44 percent in report month compared to June indices.

Average daily turnover of exchange E-system of USD/AZN auction hits $2.573 million. But average amount of each deal hits $1.286 million.  

Exchange rate of national currency on USD/AZN_TOD reduced 0.11 percent from 0.8028 to 0.8037 manat per $1 in report month. Average rate of dollar to manat hit 0.8037 manat per $1 in July compared to 0.8033 manat as a result of June 209.

Monetary market

As of August 1, the Central Bank of Azerbaijan stated drop in broad money base by 15.84 percent and 2.59 percent growth over the relevant period of 2008, as compared to a 44.27 percent-increase in 2008.

As of August 1, the reserve money amounted to 4177.4 million manat compared to 3935.6 million manta as of July 1, 4963.9 million manat as of January 2009.

As of August 1, money base in manat made up 4129.1 million manat compared to 3888.9 million as of July 4781.3 million as of Jan. 1, 2009. In 2009 it decreased by 13.64 percent, but increase by 6.5 percent as compared to 2008.

The bank reserves reduced by 43.5 percent since the beginning of the year and 20.1 percent as compared to the compared to period of 2008.

The Azerbaijani Central Bank ascertained reduction of money supply (M2) by 989.4 million manat or by 16.3 percent in annual calculation.

M2 index was 5091.6 million manat as of August 1, 2009 compared to 4872 million manat as of July 1, 2009, 6081 million manat as of Jan.1, 2009 and 5211.7 million manat as of August 1, 2008.

Moreover, volume of cash money supply (M0) decerased by 11.8 percent or (488.2 million manat ) in annual calculation. M0 index was 3657.5 million manat as of August 1, 2009 compared to 3486.4 million manat as of July 1, 4145.7 million manat as of Jan.1, 2009 and 3488.3  million manat as of August 1, 2008.

Extended Money Supply (M3) was 7582.4 million manat as of August 1, 2009 compared to 6693.9 million manat as of July 1, 8494.2 million manat as of Jan.1, 2009 and 7537.3 million manat as of August 1, 2008. In July the figure increased by 13.3 percent, in January to July reduced by 10.7 percent and in annual calculation dropped by 0.6 percent.

Transaction money (M1) as of August 1 amounted to 4365.5 million manat compared to 4198.8 million manat, 5145 and 4344.2 million respectively. In July, this figure rose by 3.97 percent, but in January-July fell by 15.15 percent and in annual calculation rose by 0.5 percent.

Parameters of the monetary market, mln AZN

Credit market

In July 2009, Azerbaijani banks increased crediting of economy by 11.8 percent, 0.92 percent compared to early 2009 and 13.6 percent in annualized pace.

As of Aug. 1, banks issued credits worth 7229.2 million manats (3856.5 million manats in national currency and 3372.7 million manats in hard currency) compared to 6463.8 million manats to July 1 (3469.9 million manats in national currency and 2993.9 million manats in hard currency) and 7163.2 million manats (3.649 million in national and 3514.2 million in hard currency) on Jan.1, 2009 and 6361.5 million manats (3448.6 million manats and 2912.9 million manats) on Aug. 1, 2008.

As for Aug. 1, 2009 the share of loans, granted in national currency was 53.3 percent and in foreign currency - 46.7 percent.

As many as 262.4 million manats of lending out of the total portfolio are overdue as compared to 242.8 million manats on July 1, 159.8 million manats on Jan.1, 2009 and 109.3 million manats on Aug. 1, 2008. Statistics of the overdue credits doesn't include analogous loans of non-bank credit organization Aqrarkredit.

Short-term credits made up 2116.6 million manats (including 141.2 million manats of overdue loans) compared to 2119.4 million manats (including 127.8 million manats of overdue loans) on July 1, 2295.9 million manats (96.7 million manats of overdue loans) on Jan. 1 in 2009. Volume of short-term loans in the economy decreased by 0.1 percent in July and 7.8 percent compared to early 2009. As of Aug. 1, 2009, as many as 43.2 percent of short-term credits and 38.8 percent of overdue credits were in hard currency.  

Long-term crediting made up 5112.6 million manats (including 121.2 million manats of overdue loans) as compared to 4344.4 million manats (including 114.9 million overdue loans) on July 1, 4,867.3 million manats (63.1 million manats) on Jan. 1, 2009. Volume of long-term loans in the economy increased by 17.7 percent in July and 5.04 percent compared to early 2009. As of Aug. 1, 2009, as many as 48.1 percent of long-term credits and 27.97 percent of overdue credits were in hard currency.

According to the CBA, as of Aug. 1, 2009, the only state bank in the country (International Bank of Azerbaijan) issued 3298.8 million manats of credits with specific weight of 45.6 percent. Private banks issued credits worth 3748.5 million manats with specific weight of 51.9 percent (increase by 0.4 percent as of July), the rest 2.5 percent accounts for non-bank loan organizations (they issued 182 million manats).

As of August 1, the average rate on bank lending to the economy of Azerbaijan in national currency amounted to 15.34 percent comlpared to 17.12 percent as of July 1, 17.45 percent as of January 1 and 18.21 percent as of August 1, 2008. Average interest rate on bank lending in hard currency was 16.39 percent compared to 17.59 percent as of July 1, 14.52 percent as of January 1 and 14.10 percent as of August 1, 2008.

Banking sector

Depositary base of Azerbaijani banks increased 21.6 percent in July, but decreased 7.81 percent compared to early 2009 and 2.5 percent in annualized pace.

The CBA said as of Aug. 1, total sum of bank deposits and deposits by enterprises and individuals hit 4.154 billion manat compared to 3.416 billion manat on July 1 and 4.505 billion manat on Jan. 1 2009 and 4.259 billion manat early August 2008. About 1.313 billion accounted for manat and 2.840 billion manat for currency.

In July, deposits by individuals increased 3.4 percent and juridical entities - 45.4 percent. The deposits by individual clients increased 5.02 percent, corporative clients reduced 17.2 percent in January-July 2009. Deposits by individuals increased by 13.2 percent, while deposits by corporative clients dropped by 13.6 percent in the annualized pace.

As of Aug. 1, the deposits of individuals hit 1.999 billion manat from the previous 1.934 billion manat on July 1 and 1.903 million manat in January and 1.766 on Aug. 1, 2008.  

Deposits of legal entities totaled 2.154 billion manat in early August compared to 1.482 billion manat as of July 1 and 2.602 billion manat as of January 1 and 2.493 billion manat as for Aug. 1, 2008.

As of Aug. 1, the deposits by individuals in national currency hit 707 million manat and 1.292 billion manat in hard currency, by juridical entities - 606.3 million manat and 1.548 billion manat in hard currency.

Average rate on deposits in manat as of August 1, 2009, amounted to 11.27 percent compared to 11.45 percent as of July 1, 11.61 percent as of January 1, 2009 and 11.97 percent as of the beginning of August 2008.

Average rate on deposits in foreign currency amounted to 9.38 percent compared to 10.77 percent, 7.96 percent and 9.52 percent respectively.

As of August 1, the average rate on deposits by individuals in manat was 12.53 percent compared to 12.75 percent as of July 1, 12.54 percent as of the beginning of January and 12.71 percent as of August 1, 2008. Average rate on deposits by individual customers in foreign currencies amounted to 12.30 percent compared to 12.53 percent, 12.43 percent and 12.93 percent respectively.

As of August 1, the average rate on deposits by legal entities in manat totaled at 8.26 percent compared to 8.36 percent as of July 1, 9.48 percent as of January 1 and 10.07 percent as of August 1, 2008. Average rate on deposits by corporate clients in foreign currency amounted to 4.85 percent compared 6.19 percent, 5.4 percent and 5.19 percent respectively.

The number of profitable banks in Azerbaijan was 39 in July 2009. The number is four less than in July 2009 and the same with the previous month.

Revenues in the sector increased 34.4 percent compared to Aug. 1 to 162.1 million manat. Total income of banks increased 10.9 percent.

The number of unprofitable banks was the same compared to June and increased one compared to early 2009. Seven banks lost 8.91 million manat, which is 40.4 percent more than the figure for Aug. 1, 2008.

Financial results of bank activities (after tax payments) with million manat:

Stock market

The total turnover of transactions on all instruments on Baku Stock Exchange (BSE) in January-July 2009 amounted to 2.66 billion manat (data by BSE).

The market of corporate securities increased by 89.68 percent. Secondary market of corporate bonds increased more than 3.6 times.

The largest increases were in the secondary stock market, which grew two times. Primary market of shares rose by 75.06 percent.

Growth of stock activity was also observed in the primary and secondary markets, which grew 1.6 times and 5.5 times respectively.

Summary table of trades on BSE

(January to July 2009)

Summary table of trades on BSE in Public sector

(January to July 2009)

Abbreviations:

GB - Government bonds

AR MF - Ministry of Finance of Azerbaijan Republic

AR CB - Central Bank of Azerbaijan Republic

GS - government securities