Weekly actual topics in Azerbaijan (Sept.7-11)
Expert predicts at least a year of high bank deposit dollarization in Azerbaijan
From the perspective of funding, Azerbaijan's banking sector is quite stable, according to the Director of Fitch Ratings' Analytical Group for Financial Institutions Dmitry Vasiliev.
"The deposit base of the country's banks is stable," Vasiliev told Trend in an exclusive interview at the 4th Annual Azerbaijan Conference held by Fitch.
"What happened in February [after Azerbaijani manat's devaluation] can't be called an outflow of deposits; it was rather a conversion of deposits from the national currency into the foreign one," he added. "In other words, that isn't a withdrawal of money from the banking system, but a 'repackaging' into other assets."
Vasiliev said it is now difficult to say when the growth in the banks' deposit portfolio will resume.
"The population's real income has decreased, accordingly, the citizens need to spend more and leave less for saving. Therefore, the further growth of the deposit base will require longer period of time," he said.
The expert added that in the medium term, dollarization of deposits will remain high for at least a year more.
"Everything will depend on oil prices in world markets," he said, adding that if the oil prices recover, the expectations for devaluation will decrease and on the other hand, confidence in national currency will increase.
"That's to say, oil prices are kind of a fundamental driver," the expert added.
As of August 1, 2015, the total volume of bank deposits of legal and physical entities attracted by credit organizations of Azerbaijan amounted to 18.214 billion manats, which is 0.1 percent less than in the previous month (18.232 billion manats) and 25.1 percent more than last year (14.558 billion manats).
As of late July 2015, deposits in manats amounted to 4.880 billion manats and 13.334 billion manats in freely convertible currency.
Thus, as of August 1, the ratio of deposits in manat and foreign currency amounted to 26.8 percent versus 73.2 percent, respectively.
As of 2015, some 50.1 percent was formed through manat deposits, while 49.9 percent of the banks' deposit base - through the deposits in freely convertible currency.
The growing share of deposits in foreign currency, observed after February, was caused by the devaluation of the national currency by nearly 34 percent, which occurred February 21, 2015.