Baku, Azerbaijan, November 22 / Trend /
Leila Abdullayeva, Trend Analytical Center Expert
The bank system of Azerbaijan faces a difficult task in becoming the key component issuing credit to the economy and being the catalyst for the growth of the non-oil sector development.
Market competition has long demanded that Azerbaijani banks should expand the list of services they offer and improve their technology. Many of them are successful in carrying out leasing operations and issue mortgage credits and credits to consumers.
In an effort to keep the level of incomes relevant to credit activity, banks increased the volume of credits to production, trade and services and have intensified efforts to assist retail business.
According to the Central Bank of Azerbaijan (CBA), that of the total credit investments in the Azerbaijani economy during first nine months of this year, 29.8 per cent went to trade and services, 7.6 per cent to construction and real estates, 5.8 per cent to industrial production, 4.8 per cent to agriculture and refining; 4.4 per cent to transport and communications and 3.1 per cent to power engineering, chemistry and natural resources development. The dominant 32.5 per cent or 3146.2 million manat were assigned in loans to households.
The bank retail business has been growing rapidly as part of the development of the network of bank branches, exploration of new credit products and the increase of competition in the deposit market. The latter has become possible thanks to a growth of trust in banks from the consumer which as a result is helping the volume of Azerbaijani citizens' bank deposits to keep growing.
The CBA reports that customers' deposits to banks in Azerbaijan totalled 3622.4 million manat on October 1, 2011, an increase of 29.4 per cent against 2798.3 million manat on the respective date last year. People's trust in banks grew substantially after the law 'On Insurance of Bank Deposits' took effect.
In addition, banks tightened competition in the market of high-tech services such as plastic cards and immediate money transfer systems. This contributed essentially to development of such operations and, on top of that, caused technical modernisation and enhancement of all fields of banks' operations such as new technology, software and naturally, a logistics base.
The CBA continues to raise the improvement ceilings for local banks. It is not going to offer new minimum capital requirements but, works to promote further capitalisation of banks.
The capitalisation of the Azerbaijani bank sector reached to 2345 million manat on October 1, 2011, up 0.7 per cent and 8.1 per cent from September 1, 2011 and the beginning of the year, respectively.
As the CBA reported, the number of banks with capital exceeding 10 million manat reached to 42 following the results of September, an increase of one bank against August, but did not change compared to the end of 2010. The share of this category of banks in the consolidated bank capital was 99.4 per cent following the results of September versus 98.9 per cent in August and in the beginning of the year.
In September 2011, the number of Azerbaijani banks operating with profit was 32, up one from August and two from the respective month of 2010.
Following the results of September, total profit of the banking system reached 128.71 million manat, up 7.1 per cent from August, but down 4.5 per cent from the respective month of last year.
The growing economy of Azerbaijan produces corresponding needs and requires rapid development of retail operations and consolidation of bank capital to meet demand, so credit institutions as well as businesses can react to these requirements adequately and professionally.