Review of monetary sector in Azerbaijan for three quarters of 2011 ( january-september 2011)

Monetary market of Azerbaijan

The Central Bank of Azerbaijan (CBA) noted the increase in money supply (M2) (cash in circulation (outside banks) and remainders in the domestic currency on accounts of non-financial organizations, financial (excluding credit) organizations and physical entities) by 0.6 percent in September and 34.6 percent compared to the same period of 2010.

So, as of Oct. 1, 2011, the rate of M2 was 9.630.3 billion manat compared to 9.569.8 billion manat as of early September and 7.156.1 billion manat as of Oct.1, 2010.

The amount of cash money supply (M0) as of Oct.1, 2011 hit 6.465.9 billion manat compared to 6.493.7 billion manat as of early October and 4.897.4 billion manat as of Oct.1, 2010.

As of early October, Broad Money Supply (M3) totaled 12.652.2 billion manat compared to 12.336.2 billion manat in early September and 9.390 billion manat as of Oct.1, 2010.

The transaction money (M1) amounted to 7.809.7 billion manat as of Oct.1 compared to 7.885.5 billion manat as of early September and 5.901.7 billion manat as of Oct.1, 2010.

Parameters of monetary market, in bln manat

As of Oct. 1 this year, the money base in manat amounted to 7.281.5 billion manat. According to the data provided by the Central Bank of Azerbaijan, in the September the money base increased by 1.1 percent, since the beginning of the year - by 11.7 percent and annually - by 32 percent.

As of Oct. 1 this year, the monetary base in manat totaled 7.206.5 billion manat compared to 7.119.3 billion manat as of Sept. 1, 6.397.1 billion manat as of Jan. 1, 2011 and 5.504.6 billion manat as of Oct. 1, 2010. In September it rose by 1.2 percent, since the beginning of the year - by 12.6 percent, annually - by 30.9 percent.

During the reported period, money in circulation amounted to 6.818.6 billion manat, while as of Sept. 1, this figure was 6.883.8 billion manat, Jan. 1 - 5.793.2 billion manat, and on Oct. 1, 2010 - 5.197.8 billion manat. In September it dropped by 0.9 percent, since the beginning of the year - increased by 17.7 percent, annually - by 31.2 percent.

In turn, bank reserves were equal to 451.2 million manat (307.3 million, 725.5 million and 314.8 million manat, respectively). In September the figure rose by 46.8 percent, since the beginning of the year - declined by 37.8 percent, annually - increased by 43.3 percent.

The ratio of the mass of cash in circulation to the money base amounted to 93.64 percent during the reporting period compared to 95.57 percent as of Sept. 1, 88.84 percent as of the beginning of the year and 94.23 percent as of Oct. 1, 2010

Azerbaijani credit market

The Azerbaijani banks increased crediting in economy by 1.5 percent in September and 8.2 percent with regard to September 2010.

Following the results of 3 quarters of 2011, credits issued to population in Azerbaijan's regions totaled 1,448.1 million manat or 15 percent of total credit portfolio of banks, the Central Bank of Azerbaijan (CBA) stated in a statistical report on Saturday.

As of October 1, credits totaled 9.667.7 million manat, including 6,019.7 million manat as credits in national currency. In Baku, the figure was equivalent to 8,219.6 million manat, including 4,964.1 million manat as credits in national currency. In the reported period, interest rate of credits averaged 16.3 percent, including 15.8 percent in Baku.

Azerbaijani banks increased the crediting of the economy by 4.5 percent during August and by 8.5 percent against August 2010, the Central Bank of Azerbaijan (CBA) stated in a statistical report publicized at its Website on Friday.

As of the early September, banks issued a total of 9,528.4 million manat, including 5,864.6 million manat in national currency and 3,663.8 million manat in hard currency versus 9,120.2 million manat, including 5,723.3 million manat in national currency and 3,396.9 million manat in hard currency in the early August and 8,788.6 million manat, including 5,448.7 million manat in national currency and 3,339.9 million manat in hard currency on September 1, 2010

Of the total portfolio, credits and loans worth 592.5 million manat were overdue against 581.1 million manat on August 1 and 423.7 million manat on September 1, 2010. The statistics of credits overdue is not inclusive of similar loans by non-bank credit organization Aqrarkredit.

As of the early September, short-term loans were equivalent to 3,071.3 million manat, including 305.1 million manat as loans overdue against 3,014.4 million manat, including 293.6 million manat as loans overdue on August 1 and 2,445.8 million manat, including 188.4 million manat as loans overdue on last September 1. The value of short-term loans to the economy rose by 1.9 percent in August and is an increase of 25.6 percent against August 2010. As of the late August, 39.8 percent of short-term loans and 33 percent of loans overdue were in hard currency.

As of the early September, long-term loans were equivalent to 6,457.1 million manat, including 287.4 million manat as loans overdue against 6,105.8 million manat, including 287.5 million manat as loans overdue on August 1 and 6,342.7 million manat, including 235.3 million manat as loans overdue on last September 1. The value of long-term loans to the economy rose by 5.8 percent in August and is an increase of 1.8 percent against August 2010. As of the late August, 37.8 percent of short-term loans and 27.5 percent of loans overdue were in hard currency.

The CBA reported that, as of the early September, the only state-run bank of the country - the International Bank of Azerbaijan - issued loans worth 3,218.7 million manat with the share of 33.8 percent of total (an increase of 1.5 percent during August), while private-run banks issued loans worth a total of 6,068.6 million manat, with the share of 63.7 percent of total (up 6.3 percent). The remaining 2.5 percent were 241 million manat as loans issued by non-bank credit organizations.

Of the total credit investments in the Azerbaijani economy's sectors 29.8 percent, or 879.1 million manat were granted in trade and services, 3.1 percent, or 300.5 million manat - the development of energy industries, chemicals and natural resources .

Some 4.8 percent, or 466.1 million manat fell to the share of agriculture and processing, 7.6 percent, or 738.0 million manat - construction and real estate, 5.8 percent, or 563.5 million manat - industry and manufacturing , 4.4 percent, or 385.2 million manat - transport and communications, and 32.5 percent, or 3.146.2 billion manat - households.
As of Oct.1, the average rate on bank lending to the Azerbaijani economy in national currency amounted to 16.07 percent compared to 16.19 percent as of Sept.1, 2011, 16.37 percent - Jan.1 2011.

The average rate on bank lending in foreign currency was 16.34 percent compared to 16.42 percent and 17.31 percent respectively.

In early October, the average rate on bank lending to legal entity in national currency amounted to 14.42 percent compared to 14.30 percent as of Sept. 1, 2011 and 14.4 percent as of Jan. 1, 2011. The average rate on bank loans to corporate customers in foreign currency was 13.91 percent compared to 13.87 percent and 14.2 percent respectively.

As of Oct. 1, the average rate on bank lending to individuals in national currency amounted to 18.77 percent compared to 19.30 percent as of Sept. 1, 2011 and 19.84 percent as of Jan.1, 2011. The average rate on bank credit for an individual client in foreign currency amounted to 22.62 percent compared to 23.01 percent and 23.73 percent respectively.

Banking sector

As of Oct. 1, 2011, the total amount of bank deposits and deposits of legal entities and individuals in the Azerbaijani banks amounted to 6.152.8 billion manat, the Central Bank of Azerbaijan (CBA) reported.

Including deposits of non-residents and government agencies, the figure was 8.740.6 billion manat, which is more by 3.4 percent compared to Sept.1.

In general, the deposit base of Azerbaijani banks increased by 14.6 percent in January-October of 2011 and by 32.6 percent - year on year. As of Sept.1, the deposit base of the Azerbaijani banks amounted to 8.449.7 billion manat, 7.625.8 billion manat - Jan.1, 2011 and 6.591.3 billion manat- Oct.1,2010.

As of Oct.1, 2011, the volume of physical entities' deposits in banks in Azerbaijan amounted to 3.622.4 billion manat, which is 29.4 percent higher compared to the same period of 2010 (2.798.3 billion manat).

Some 1.798.7 billion manat (49.6 percent) of the population were placed in the national currency - manat, 1.823.7 billion manat - in foreign currency. Unlike the data for August, when the cash deposits of the Azerbaijani population in national currency exceeded the cash deposits in foreign currency, the situation is reversed in September.

As of Sept.1, 2011, the volume of physical entities' deposits in Banks in Azerbaijan amounted to 3.660.7 billion manat, of which 1.837.7 bmillion manat (50.2 percent) were placed in the national currency - manat, 1.823 billion manat - in foreign currency.

About 76 percent of the cash deposits are in accounts of private banks.

Following the results of 3 quarters of 2011, people's deposits to banks drawn from Azerbaijan's regions (areas except for Baku) were 311.8 million manat, an equivalent to 8.6 percent of the combined deposits to banks, the Central Bank of Azerbaijan (CBA) stated in a statistical report on Saturday.

As of October 1, deposits to banks totaled 3,622.4 million manat, including 1,798.7 million manat as deposits in national currency. In Baku, the figure was equivalent to 3,310.6 million manat, including 1,573.9 million manat as deposits in national currency. In the reported period, interest rate of deposits averaged 9.7 percent, including 9.9 percent in Baku.

In the period, deposits were equivalent to 91.5 million manat (average interest rate of 9.4 percent) in the Absheron economic region, 48.9 million manat (5.2 percent) in the Aran region, 6.7 million manat (7.5 percent) in the Mountain Shirvan region, 67.6 million manat (8.7 percent) in the Ganja-Gazakh region, 24.6 million manat (7.7 percent) in the Guba-Khachmaz region, 25.1 million manat (7.5 percent) in the Lenkoran region, 19.4 million manat (6.4 percent) in the Sheki-Zagatala region, 6.8 million manat (3.9 percent) in the Upper Karabakh region, 1.3 million manat (6.8 percent) in the Kelbajar-Lachin region, and 20.05 million manat (3.3 percent) in the Nakhchivan region.

As of September, the amount of legal entities' deposits totaled 2.530.4 billion manat, of which 661.4 million manat invested in the national currency, 1868.9 million manat - in foreign currency.

As of Sept.1, the amount of legal entities' deposits in banks totaled 2.437.2 billion manat compared to 2.177 billion manat as of early 2011, 2.026.6 billion manat as of September 2010.

The capitalization of the banking sector in Azerbaijan increased by 0.7 percent in September and by 8.1 percent compared to early 2011, amounting to 2.345 billion manat as of Oct.1, the Central Bank of Azerbaijan (CBA) said on Saturday.

According to statistic data of the CBA, the number of banks with capital exceeding 10 million manat, hit 42 in September, increasing by one bank compared to August, while compared to late 2010 it remained unchanged. The share of this category of banks in the total amount of capital of all banks in the country in September hit 99.4 percent compared to 98.9 percent in August and early 2011.

One bank (with share of 0.9 percent) capital is formed in the range from 5 to 10 million manat, while another bank (0.2 percent) - from 3.5 million to 5 million manat

Total assets of the Azerbaijani banks as of early October, 2011 amounted to 13.57 billion manat, which is 2 percent more compared to early September, the Central Bank of Azerbaijan said.

Banks' investments amounted to 1.23 billion manat in January-September, decreasing by 3.9 percent compared to August, loans allocated to customers - 8.76 billion manat. The volume of loans and deposits issued to the financial sector amounted to 600.9 million manat. Funds on correspondent accounts for the period amounted to 1.12 billion manat. Cash of Azerbaijani banks amounted to 595.6 million manat.

Total liabilities of Azerbaijani banks as of Oct.1, 2010 amounted to 11.22 billion manat, increasing by 2.3 percent during the year. Some 6.1billion manat falls to deposits, and 4.4 billion manat - loans and deposits received from the financial market.

Some 32 profitable banks operated in Azerbaijan in September 2011. The number increased by one bank compared to August and increased by two banks compared to the same period of 2010, the Central Bank of Azerbaijan (CBA) said.

In September, total profits in the banking sector hit 128.71 million manat, or 7.1 percent more compared to the relevant figure in August.

The number of unprofitable banks decreased by one bank in September and by 5 in annual calculation. As a result, the loss of 12 banks amounted to 19.66 million manat, or 13.2 percent less compared to August and 50.9 percent less compared to September 2010.

Bank Financial Results (After Tax) in million manat:

According to the Central Bank of Azerbaijan (CBA), five banks were in the process of going into liquidation in the country during the third quarter of this year, the CBA's report said. As of Jan. 1, 2011, four banks were in the process of liquidation and two banks in the third quarter of 2010.

About 44 banks had licences to conduct banking activity in the republic during the reporting period.
At present about 22 banks operate with foreign capital in the country. Foreign capital in seven banks is formed from 50 to 100 per cent and up to 50 per cent in 13 banks. Two local branches of foreign banks also operate.

About six bank branches operate abroad, including six representative offices, two subsidiaries and one branch. Five representative offices of foreign banks also operate in Azerbaijan.

As of the end of the third quarter, about 656 local branches of banks operated in the country, including 37 branches of the International Bank of Azerbaijan and 619 branches of private banks. The number of local branches has been increased by 1.8 per cent since early 2011.

The number of bank branches reached 147 or 22.5 per cent more compared to early 2011.

The number of non-bank credit organizations (NBCOs) operating in Azerbaijan increased by 10 and amounted to 111 during three quarters of 2011, the Central Bank of Azerbaijan said on Monday.

The number of the credit unions is 89. The number increased by four since early 2011. The number of credit institutions funded by the international humanitarian organizations is 24. Since early 2011, 6 credit unions have received relevant licenses to operate. Today, 73 branch offices of these organizations operate in the country.

According to the CBA, the authorized capital of NBCOs operating in the country amounted to 42.18 million manat, assets - 300.08 million manat, while the number of branches - 85 during three quarters.

The authorized capital of credit unions is 11.24 million manat and total assets - 37.71 million manat. The authorized capital of credit institutions funded by the international humanitarian organizations is 12.41 million manat and assets - 236.18 million manat.