Monetary market in Azerbaijan (January-September 2010)

The Central Bank of Azerbaijan (CBA) has identified the main directions of activities in the near future in maintaining the stability of the banking system. A number of essential areas have been identified for this: transparency, the quality of the capital base of banks have been increased, the requirements to cover the risks have been tightened, the financial leverage has been restricted, and counter-cyclical capital requirements have been established for reservation of capitals, liquidity norms have been revised.

These measures are intended to increase the stability of the banking system, the main channel of financial intermediation in the market economy, long-term stable source of resources for economic growth.

Currency market and manat rate

The selected policy of maintaining a stable exchange rate has created conditions for the preservation of low inflation, curbing the growth of dollarization and preventing the crisis on the balance sheets of banks and business entities. The policy to preserve the stability of the national currency has prevented a sharp price rise in imports of goods intended for the development of local production, protected populations' deposits from the from depreciation, curbed the growth of debt on loans in foreign currency.

In September the official exchange rate of the national currency with regards to dollar rose by 9 points. The rate of dollar dropped from 0.8036 manat per USD to 0.8027 per USD.

Even if in the first ten days of the months, the exchange rate of the dollar rose to a maximum of 0.8038 manat per dollar (September 8-12), after it had a tendency to fall and by the end of September reached a minimum value of 0.8027 manat per dollar. Fluctuation between maximum and minimum values was 11 points.

Rate of euro rose in Azerbaijan in September. The currency rate increased by 704 points (from 1.0211 manat per euro to 1.0915 manat to euro). Monthly minimum rate was 1.0203 euro per manat was fixed from 8 to 12 September, monthly maximum rate was 1.0915 euro per manat marked on Sept. 30. Fluctuation between maximal and minimum significance made up 712 points.

On results of trades in currency section on tool USD/AZN_TOD Baku Interbank Currency Exchange (Baki Banklararasi Valyuta Birjasi - BBVB) defined five banks - leading operators of exchange market of hard currency in September 2010, BBVB reported.

Joint-Stock Commercial Bank "ASB" has headed five bank-leaders of exchange currency market in accordance with shares of transactions concluded by it. UniBank, AGBank, EuroBank and PASHA Bank also included in the number of the leading dealers

BANKS

OF THE TOTAL (%)

ASB

79,4%

UNIBANK

13,52%

AGBank

2%

EuroBank

1,82%

PASHA Bank

7,82%

In total 13 banks have taken part in the trades of currency section of the BBVB in September 2010. 44 trading sessions were conducted and 35 transactions were registered.

Average daily turnover in exchange electronic trading system on USD/AZN totaled about $1.571 million, while the average amount of each transaction was $1.428 million.

Exchange rate of national currency on USD/AZN_TOD in the reporting month rose by 0.06 percent - from 0.8037 to 0.8032 for 1 dollar. Average rate of the manat to the U.S. dollar in September was 0.8033 manat per 1 USD.

Monetary market

Amid essential tendencies of economic cycle, with regard to maintain the business activity and economic growth the CBA maintained parameters of percentage corridor, obligatory norms of reserving, sources of increasing money mass.

The Central Bank of Azerbaijan (CBA) noted the increase in money supply (M2) by 1.6 percent in September and 37 percent compared to September 2009, the CBA reported. So, as of late September, the rate of M2 was 7156,1 million manat compared to 7046,6 million manat as of late August, 2009 and 5222,4 million manat as of Oct. 1, 2009.

The amount of cash money supply (M0) in late September hit 4897,4 million manat compared to 4850,8 million manat as of late August and 3620,1 million manat as of Oct.1, 2009.

As of late September, Broad Money Supply (M3) totaled 9,390 million manat compared to 9,315 million manat in late August and 7458,4 million manat as of Oct.1, 2009.

The transaction money (M1) amounted to 5901,7 million manat compared to 5803,9 million manat as of late August and 4449,2 million manat as of Oct.1, 2009.

Parameters of monetary market, in mln manat

Volume, September 2010

Money mass in extensive understating (М3)

9390

Money mass on manat (М2)

7156,1

Cash in manat (М0)

4897,4

Non-cash in manat

2258,7

Loan market

Azerbaijani banks increased lending to the economy of Azerbaijan by 1.7 percent in September 2010 and by 14.85 percent compared to the same period of 2009.

As of late September, 2010 the banks provided loans totaling 8.936.6 million manat (including 5.562.1 million manat in national currency and 3.374.6 million in hard currency) compared to 8.788.6 million manat (5.448.7 million manat in national currency and 3.339.9 million manat in hard currency) as of Sept. 1, and 7.780.8 million manat (4.310.2 million manat and 3.470.6 million manat) as of Oct.1, 2009.

In September, the share of loans provided in national currency was 62.2 percent, in foreign currency - 37.8 percent.

Of the total portfolio, loans worth 448.5 million manat were overdue compared to 423.7 million manat as of September 1, about 309.4 million manat as of Oct.1, 2009. In September the amount of overdue loans and debts rose by 5.85. Rise was 45 percent compared to September 2009. Statistics of overdue loans does not include similar loans of non-bank credit institution Aqrarkredit.

Short-term loans as of late August amounted to 2.486.5 million manat compared to 2.445.8 million manat as of late August, about 2.159.1 million manat as of Oct.1, 2009. In September the amount of short-term credit in the economy increased by 1.7 percent but 15.2 percent compared to September 2009

Long-term loans amounted to 6.450.1 million manat compared to 6.342.7 million manat as of Sept. 1, about 5.621.8 million manat as of Oct.1, 2009. In September the amount of long-term loans increased by 1.7 percent, compared to September 2009 - by 14.7 percent.

As of late September, the only state bank of the country (the International Bank of Azerbaijan) granted loans totaling 3.930.9 million manat with a specific weight of 44 percent (unchanged in September), and private banks - 4.823.6 million manat with a specific weight of 54 percent (increased by 0.1 percent). The remaining 2 percent fall on the share of non-bank credit organizations, which received loans worth 182.2 million manat.

As of Oct.1, the average rate on bank credit to the Azerbaijani economy in national currency amounted to 14.1 percent compared to 15.85 percent as of Sept.1, 14.63 percent  as of Oct.1, 2009, the Central Bank of Azerbaijan (CBA) said.

The average rate on bank lending in hard currency was 16.21 percent compared to 17.39 percent and 16.35 percent, respectively.

In early October, the average rate on bank lending of a legal entity in national currency amounted to 11.77 percent compared to 14.29 percent as of Sept.1, 12.15 percent as of Oct.1, 2009. The average rate on bank loans to corporate clients was 13.16 percent compared to 14.75 percent and 13.88 percent, respectively.

During the report period, the average rate on bank lending of an individual entity in national currency amounted to 19.45 percent compared to 19.49 percent as of Sept.1 and 20.57 percent as of Oct.1, 2009. The average rate on bank loans for individual clients was 22.93 percent compared to 23.01 percent and 22.25 percent, respectively.

Banking sector

Depositary base of Azerbaijani banks increased by 2.7 percent in September, 11.7 percent compared to the same period in 2009, the Central Bank of Azerbaijan (CBA) said.

Based on the CBA data, as of late September, total sum of bank deposits and deposits by enterprises and individuals hit 4715.2 million manat compared to 4589.4 million manat as of late August and 4220 million manat as of early October 2009. About 2128.2 million accounted for manat and 2587 million manat for currency.

In September, deposits by individuals increased by 2.8  percent and legal entities by 2.6 percent. The deposits by individual clients increased by 32 percent and legal entities - decreased by 8.7 percent compared to September 2009.

As of late September, the deposits of individuals hit 2798.3 million manat from the previous 2720.8 million manat as of late August and 2120.7 million manat as of October 2009.  

Deposits of legal entities totaled 1916.8 million manat compared to 1868,6  million manat as of late August and 2099.2 million manat as of late October 2009.

The average rate on deposits in manat October 1 was 11.21 percent compared to 10,99 percent September 1, 11.80 percent October 1, 2009, the Central Bank of Azerbaijan (CBA) said.

The average rate on deposits in foreign currencies amounted to 10.41 percent compared to 10.57 percent and 10.64 percent respectively.

On October 1 the average rate on deposits of physical entities in manat hit 12.1 percent compared to 12.09 percent September 1, 13.04 percent in early October 2009. The average rate on deposits of individual customers in foreign currencies amounted to 12.08 percent compared to 12.11 percent, 12.5 percent, respectively.

In early October, the average rate on deposits of legal entities in manat hit 6.02 percent compared to 6.14 percent September 1 and 7.83 percent October 1, 2009. The average rate on deposits of corporate clients in foreign currency amounted to 5.58 percent compared to 5.66 percent and 4.79 percent respectively.

The number of profitable banks in Azerbaijan amounted to 30 in September. The figure increased by one bank from August and is eight banks less than during the same period in 2009, the Central Bank of Azerbaijan (CBA) reported.

Total profit in the banking sector declined by almost 54.8 percent compared to September 2009, and increased by 16.7 percent compared to the previous month to 94.71 million manat.

The number of unprofitable banks decreased by one, and by 9 units compared to September 2009. As a result, a loss of 17 banks amounted to 40.05 million manat, which is 18.5 percent more than the August index and almost 4.2 times higher than during the same period in 2009.

Bank Financial Results (After Tax) in million manat:

Periods

The number of banks operating profitably

The total profit of the banking system (on profitable banks)

The number of banks operating in loss

The total loss of the banking system (on unprofitable banks)

Total profit (+) or loss (-) obtained by banks

01-10-2008

38

179.62

7

12.33

167.29

01-10-2009

38

219.02

8

9.62

209.4

01-10-2010

30

134.76

17

40.05

94.71

The capitalization of the Azerbaijani banking sector reached 2.135 billion manat in September, or 1.04 percent more than last month and 6.5 percent more than in early 2010, the Central Bank of Azerbaijan (CBA) reported.

According to the CBA, the number of banks with capital exceeding 10 million manat reached 41 by late September. The figure remained constant compared to August and September 2009. The weight of these banks in the total capital of the market fell in September from 97.9 to 97.8 percent.

Four banks (with a specific weight of 1.8 percent) have capital ranging from 5 million to 10 million manat. One bank (0.2 percent) has capital ranging from 3.5 million to 5 million manat. And one other bank (0.2 percent) has capital in the 3.5 million manat and under range.

Stock market

The total turnover of transactions on all instruments at Baku Stock Exchange (BSE) in January-September 2010 amounted to 1.341 billion manat. It reduced by 2.17 times, a message said.

The market for corporate securities increased by 23.75 percent over the same period last year, amounting to 314.669 million manat. It is explained by the increased volume of transactions in corporate bonds by 2.46 times. The number of transactions was increased by 2.3 times up to 164.

The market of state securities market reduced by 2.59 times, reaching 1,026.508 million manat.

The total volume of transactions for the period of January - September 2010 for all securities traded in Baku Stock Exchange was 1.341.177.557,09 manat.
Comparative table on the results of trades of Corporate Securities at BSE

(January-September 2010)

Market segments

2010 (30.09.10)

2009 (30.09.09)

Percentage ratio

Volume of transactions,

AZN

Number of transactions

Volume of transactions,

AZN

Number of transactions

Corporate bonds- (placement)

69,620,806.59

82

35,606,344.08

39

195.53%

Corporate bonds - (secondary market)

125,720,233.52

82

43,841,185.09

32

286.76%

CBs Total

195,341,040.11

164

79,447,529.17

71

245.87%

Stocks - (placement)

114,276,934.96

949

139,720,247.40

1,271

81.79%

Stocks -

(secondary market)

5,051,463.75

1,534

35,108,337.62

2,274

14.39%

Stocks Total

119,328,398.71

2,483

174,828,585.02

3,545

68.25%

CS Market Total

314,669,438.82

2,647

254,276,114.19

3,616

123.75%

Comparative table on the results of trades of Government Securities at BSE

(January- September 2010)

Market segments

2010 (30.09.10)

2009 (30.09.09)

Percentage ratio

Volume of transactions,

AZN

Number of transactions

Volume of transactions,

AZN

Number of transactions

GB - (AR MF) (placement)

173,414,126.08

77

370,903,190.21

210

46.75%

GB - (AR MF) (secondary market)

82,332,007.92

43

140,123,016.06

76

58.76%

GB Total

255,746,134.00

120

511,026,206.27

286

50.05%

Notes (AR CB) - (placement)

159,449,447.81

131

264,738,921.15

169

60.23%

Notes (AR CB) - (secondary market)

5,564,936.87

2

67,504,812.02

39

8.24%

Notes Total

165,014,384.68

133

332,243,733.17

208

49.67%

Repo operations

605,747,599.59

592

1,811,711,060.65

600

33.44%

GS Market Total

1,026,508,118.27

845

2,654,981,000.09

1,094

38.66%

Abbreviations:

GB - government bonds

GS - government securities

CB- corporate bonds

CS- corporate securities

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