The currency reserves of the Central Bank of Azerbaijan (CBA) have increased by $54.8 million (1.3 percent) in April 2016, as compared to March and neared $4.121 billion.
The CBA's reserves have increased for two months in succession after a long-lasting decrease.
The CBA's reserves increased by $39.5 million (0.98 percent) in March 2016 as compared to February and neared $4.066 billion.
According to the statistics data, the CBA's foreign exchange reserves decreased by $4.267 billion (by twofold) compared to April 2015.
The CBA's currency reserves have started to decrease since July 2014.
At the very beginning, this process was going slowly (at around $20-$50 million), but starting from December 2014, the volume of currency reserves decreased sharply as the demand for the dollar supply increased in the country.
Meanwhile, it is due to the intervention carried out by the CBA on the currency market in order to keep the exchange rate of manat against the US dollar at a stable level.
The major decisions were also made in the Azerbaijani financial sector in April, regulating banking activity.
Azerbaijan's Financial Market Supervisory Body has temporarily banned restructuring the consumer loans in foreign currency (dollars).
It is related to the decision of the Financial Market Supervisory Body to suspend issuing consumer loans in foreign currency from Apr.5, 2016 for a period of one month.
In order to ensure the financial stability and protect the consumer rights, to carry out in-depth and comprehensive analysis in the sphere of issuing foreign currency loans, it was decided to set new regulatory frameworks within a month.
The Financial Market Supervisory Body also recommended the banks to temporarily suspend the issuance of loans to pensioners. The ban is temporary and it is a recommendation. The terms of the prohibition has not been specified. The decision is stipulated by the fact that this category of the population is included in the group of the high-risk borrowers.
Currency market and manat rate
The CBA resumed buying dollars on the foreign exchange auction in April. The CBA has been buying dollars through the auction for the first time since May and June 2015. Except for a specified period, the CBA conducted only the dollar intervention after the devaluation of the manat.
Thus, the rate of manat is formed on the basis of supply and demand on the currency market in accordance with the flexible exchange rate of manat. However, the national currency rate has intensified versus the dollar in terms of de-dollarization due to the fact that the supply exceeded demand in April. There was a need for manat intervention to limit the short-term fluctuations on the foreign exchange market.
In January-April 2016, as much as $1.19 billion in cash was purchased in Azerbaijan, which is 5.4 times less than for four months of 2015 ($6.5 billion), according to the report.
At the same time, the volume of foreign exchange operations in the country in January-April 2016 exceeded $1.2 billion (a 20 percent increase compared to the previous year), according to the report.
During the same period, as much as 191.5 million euros, 12.5 million pounds and 716.2 million rubles were purchased in Azerbaijan. Compared to the four months of 2015, the demand for the euro decreased by 2.3 times (430.7 million euros), for the pounds - almost doubled (23.4 million pounds) for the rubles - by 28.4 percent (one billion rubles).
Also, some 117.78 million euros were sold in Azerbaijan in January-April 2016 against 128 million euros in four months of 2015, as well as 1.7 million pounds against 954,500 pounds, and 2.96 billion rubles against 2.48 billion rubles.
Currency exchange in Azerbaijan is possible only in branches and offices of banks.
Azerbaijani monetary market
The money supply rate (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) hit 9.206 billion manat in April 2016 increasing by 2.94 percent for a month and decreasing by 16.3 percent for the year, the CBA's report said.
The amount of cash money supply (M0) decreased by 17.4 percent for a year from 6.421 billion manat to 5.303 billion manat. M0 increased by 5.3 percent compared to the previous month.
As of April 2016, Broad Money Supply (M3) totaled 20.566 billion manat or 8.3 percent more compared to April 2015 and by 0.3 percent less as of March 2016.
The transaction money (M1) decreased by 10.3 percent for a year and increased by 5 percent by hitting 7.414 billion manat compared to March.
Parameters of monetary market, in billion manat:
|
Volume, April 2016 |
|
|
Money mass in extensive understating (М3) |
20565,7 |
|
Money mass on manat (М2) |
9205,8 |
|
Cash in manat (М0) |
5303,5 |
|
Non-cash in manat |
3902,3 |
The bank reserves in Azerbaijan neared 1.631 billion manats as of May 1, 2016, or twice as much as in April 2015 (858.3 million manats).
The report said the monetary base in the country as of May 1, 2016, neared 7.473 billion manats, or 5.05 percent less compared to the same period 2015.
This figure exceeded 7.870 billion manats as of April 2015. The monetary base in Azerbaijan has decreased by 1.16 percent as compared to early 2016.
The monetary base in manats exceeded 6.726 billion manats as of May 1, 2016, as compared to around 7.419 billion manats as of May 1, 2015, said the CBA.
The volume of currency in circulation neared 5.835 billion manats during the reporting period, while this figure stood at around 7.009 billion manats as of May 1, 2015.
The ratio of the mass of cash in circulation to the monetary base was 75.8 percent as of April 1, 2016, decreasing by 14.5 percent compared to the same index as of April 1, 2015.
Azerbaijan's loan market
The credit portfolio of the Azerbaijani banks reduced by 4.7 percent and hit up to 18.8 billion manat. The banks' lending in the economy declined by almost nine percent compared to April 2015.
According to the CBA, as of May 2016, the banks issued loans worth 9.7 billion manat (51.8 percent) - in the national currency, 9.04 billion manat (48.2 percent) - in freely convertible currency.
This ratio hit 27 and 73 percent in early 2015. But the share of foreign currency loans began increasing, reaching 49.3 percent as of the year after the February devaluation of the manat.
However, Azerbaijan's Financial Market Supervisory Body has established a moratorium on the issuance of consumer loans in foreign currency to the individuals who do not have foreign exchange earnings and bank deposits since April 2016 and imposed a ban on mortgage loans in foreign currency since May.
As a result, the share of manat loans began to grow gradually. For comparison, some 50.9 percent of the loan portfolio of banks accounted for the loans in national currency in March 2016.
The volume of overdue bank loans reached 1.381 billion manat in Azerbaijan in April 2016, increasing by 4.1 percent compared to March.
According to the report, the share of these loans in the loan portfolio of banks was 7.4 percent compared to 6.7 percent as of late March.
As of May 1, 2016, the volume of short-term loans amounted to 4.2 billion manat (including overdue loans worth 505.6 million manat) decreasing by 6.25 percent and 8.3 percent for the month compared to late April 2015.
The volume of long term loans decreased by 4 percent for the month and by 8.75 percent up to 14.6 billion manat for the year (including 875.7 million manat of overdue loans).
According to the CBA, the credit portfolio of the state banks in the country hit almost 6.2 billion manat with the specific weight of 32.9 percent, while private banks issued loans worth around 12.04 billion manat with a specific weight of 64.2 percent.
The remaining 2.9 percent accounted for the share of non-bank credit organizations which issued 548.9 million manat, according to the CBA.
There are 37 banks in Azerbaijan, including two state-owned banks and 157 non-bank credit organizations, including 109 credit unions.
Azerbaijani banks decreased the consumer lending volume to 7.19 billion manat in April 2016 or by 5.15 percent less than in March, said the report.
The consumer lending volume decreased by 12.32 percent for the year, while by 1.2 percent in April 2015.
The consumer lending volumes decreased in Azerbaijan after the first devaluation of the manat rate [the dollar rate increased by almost 34 percent February 21, 2015].
However, the largest part of the total loan portfolio of banks - 38.3 percent (as of April) accounts for the consumer loans.
The construction and real estate sector (15.2 percent or 2.85 billion manat) ranked second in the total loan portfolio of banks. The trade and services (14.3 percent or 2.68 billion manat) ranked third.
Around 6.4 percent was directed to the industry and production in January-April. In nominal terms it amounts to 1.21 billion manat.
The share of transport and communication hit 8.1 percent (1.51 billion manat), agriculture and processing reached 2.3 percent (432 million manat), energy, chemistry, and natural resources - 1.6 percent (296.3 million manat).
The loans given to the population in Azerbaijan's districts totaled 3.029 billion manat as of April 2016, or 16.14 percent of the banks' total loan portfolio and 11.7 percent less than in the same period of 2015, the CBA says.
The loans worth 15.730 billion manat were delivered in Baku. Here the loans in national currency (manat) amounted to 7.653 billion manat. For comparison, the loans amounting to 17.165 billion manat were delivered in Baku in April 2015. Some 9.508 billion manat accounted for the loans in national currency.
The average interest rate on loans throughout the country was 12.3 percent in April 2016, while in Baku this index stood at 10.8 percent. The lending volume in the Absheron economic district totaled 617.7 million manat at an average rate of 16.9 percent.
In other economic districts the lending index was as follows: Aran - 795.7 million manat at a rate of 21.9 percent, Mountainous Shirvan - 114.1 million manat at a rate of 21.5 percent, Ganja-Gazakh - 640.17 million manat at a rate of 19.8 percent, Guba-Khachmaz - 222.15 million manat at a rate of 20.7 percent, Lankaran - 267.28 million manat at a rate of 22.3 percent, Shaki-Zagatala - 202.3 million manat at a rate of 21.4 percent, the Upper Karabakh - 48.1 million manat at a rate of 19 percent, Kalbajar-Lachin - 0.93 million manat at a rate of 17 percent, Nakhchivan - 120.5 million manat at a rate of 13.6 percent.
Azerbaijani banks reduced the average interest rate on loans in national and foreign currency in April 2016.
The average rate on bank lending in the Azerbaijani economy in national currency amounted to 12.85 percent in April compared to 12.89 percent in March.
The average interest rate on loans hit 14.14 percent as of April 2015.
The average rate on bank lending in freely convertible currency made up 11.41 percent in April 2016 compared to 11.64 percent in the previous month and 13 percent as of May 1, 2015.
The average rate on bank lending to the legal entities in national currency amounted to 8.84 percent compared to 9.72 percent in April 2015. The index remained unchanged compared to March 2016.
The average rate on bank lending to the corporate clients in freely convertible currency amounted to 7.68 percent in April 2016 compared to 8.31 percent in March and 9.28 percent in April 2015.
As of April 2016, the average rate on bank lending to physical entities in national currency amounted to 16.91 percent compared to 17 percent in March and 18.63 percent as of May 1, 2015.
The average rate on bank loans to the individual customers in freely convertible currency was 19.33 percent compared to 18.91 percent and 21.06 percent accordingly.
Mortgage lending
The loans amounting to 200,000 manat were issued through the Azerbaijan Mortgage Fund (AMF) in April 2016 compared to 34.9 million manat in April 2015.
The total amount of refinancing the loans issued by the banks earlier amounted to 3.5 million manat in April.
Some 3.5 million manat were transferred from the state budget to the AMF.
The average amount of the loan issued by AMF's authorized banks hit 40.883 manat (this figure amounted to 40.482 manat in April 2015), the average term of loan issue - 280 months (279 months), the average interest rate is 6.7 percent (versus 6.74 percent in 2015), and the average monthly payment is 296.7 manat (297.6 manat) in April.
In general, the AMF's authorized credit organizations have delivered 17,997 mortgage loans worth 730.8 million manat since 2006 up till now.
Currently, the maximum amount of a common mortgage loan through the AMF is 50,000 manat at a rate of 8 percent with a payback period of 25 years. Terms under the social mortgage are 50,000 manat at an annual rate of 4 percent with a payback period of 30 years. The initial payment under a social mortgage is 15 percent, whilst a conventional loan is 20 percent.
Conditions of mortgage lending are as follows: Loans must be issued in Azerbaijani manat and only to Azerbaijani citizens and the mortgage can only be for an apartment or a private house.
The volume of mortgage lending must not exceed 80 percent of the market price and the monthly payment must not exceed 70 percent of the debtor's monthly income. It is compulsory to have an agreement on life insurance.
Preferential conditions are granted to family members of war victims, national heroes, internally displaced persons, civil servants with at least a three years' experience, PhDs and those making special contributions to sport as well as to the military with at least a three-year service term. Each family having the right to such a mortgage can only use the opportunity.
Azerbaijan's banking sector
The economic cycles, seasonal factors and the attitude of investors, dictated by a variety of causes, impact on the dynamics of deposits.
As of May 1, 2016, the total amount of bank deposits of physical and legal entities totaled 22.56 billion manat, the CBA's report says.
The amount of bank deposits decreased by 2.42 percent for the month, but increased by 19.8 percent for the year.
The deposits in national currency amounted to 4.33 billion manat in Azerbaijani banks in April 2016, decreasing by 1.6 percent for the month.
As of May 1, the deposits in national currency - manat amounted to 19.2 percent compared to 19.03 percent as of late March, almost 50.6 percent - demand deposits, the rest amount - term deposits.
According to the report, during the period, the deposits in freely convertible currency decreased by 2.67 percent up to 18.22 billion (5.51 billion manat - demand deposits, 12.71 billion manat - term deposits).
The share in the deposit base of banks decreased from 80.9 percent to 80.8 percent for the month.
The foreign currency deposits began increasing after the devaluation in February 2015. For comparison: 51.7 percent of the banks' deposit base was formed in January 2015 through the deposits in freely convertible currency. However, as of 2015, this figure reached 81.6 percent.
The volume of the physical entities' deposits in Azerbaijani banks amounted to 7.69 billion manat in April 2016. Some 81.7 percent or 6.28 billion manat accounted for the foreign currency deposits.
The population's bank deposits decreased by 2.5 percent for the month. The deposits decreased by 0.4 percent per annum.
The total volume of the legal entities' deposits in the country's banks amounted to 14.87 billion manat or by 33.8 percent more than in April 2015 - 11.11 billion manat.
As of May 2016, the volume of the financial organizations' deposits hit 6.18 billion manat compared to 6.26 billion manat in April 2015.
The volume of the non-financial organizations' deposits hit 8.69 billion manat compared to 4.85 billion manat in April 2015.
The population's deposits, attracted to Azerbaijan's banking system from the country's districts (except for Baku), totaled 527.6 million manat in April 2016, or 6.86 percent of the total bank deposits.
The volume of deposits in Baku was 7.157 billion manat, while some 1.162 billion manat (16.24 percent) accounted for the deposits in the national currency.
The foreign currency savings of the residents of Azerbaijani regions amounted to 282.3 million manat (53.51 percent of total deposits in the regions) in the reporting period.
As of April 2016, the average interest rate throughout the country and in Baku, in particular, hit 6 percent.
Thus, the Absheron economic region is still the leader on such indices as attracting the population's deposits by the banks (176.7 million manat, average rate - 6.9 percent per annum).
During this period, the volume of deposits in the Aran economic region - 82.5 million manat at a rate of 4.9 percent, Mountainous Shirvan - 12.05 million manat at a rate of 6.4 percent, Ganja-Gazakh - 112.9 million manat at a rate 5.7 percent, Guba-Khachmaz - 33.65 million manat at a rate of 5.8 percent, Lankaran - 42.9 million manat - the rate of 6.8 percent, Sheki-Zagatala - 31.7 million manat - the rate of 4.6 percent, Upper Karabakh - 8.96 million manat - 3.4 percent, Kalbajar-Lachin - 0.03 million manat - 5.7 percent, Nakhchivan - 26.06 million manat - the average rate of 3.2 percent.
The Azerbaijani banks decreased interest rates on deposits both in national and foreign currency in April 2016 compared to the same period of 2015, the report said.
The average rate on deposits in manat made up 7.77 percent as of May 1, 2016 compared to 7.85 percent as of April 1, 8.82 percent as of May 1, 2015.
As of May 1, the average rate on deposits in foreign currency amounted to 5.84 percent versus 6.28 percent as of April 1.
As of May 1, the average rate on deposits in freely convertible currency amounted to 8.31 percent.
The average rate on deposits of legal entities in manat made up 5.55 percent as of May 1, 2016 versus 5.43 percent as of April 1, 5.88 percent as of May 1, 2015.
The funds on the accounts denominated in the freely convertible currency brought legal entities 3.42 percent, 3.37 percent, 3.93 percent respectively.
As of May 1, 2016, the average interest rate on deposits of physical entities in manat made up 8.94 percent, 9.19 percent as of April 1, 2016, 9.58 percent as of May 1, 2015.
The interest rates on deposits of physical entities in foreign currency are as follows: as of May 1 - 7.08 percent, as of April 1, 2016 - 7.75 percent, as of May 1, 2015 - 9.51 percent.
Payment card market
The total turnover on payment cards via ATMs and POS-terminals amounted to 971 million manat in April 2016 (7.8 percent less than in the same period of 2015) and the total number of transactions - 6.56 million or by 7.3 percent less for the year, according to the CBA report as of Jan.-April 2016.
The number of transactions on debit cards equaled 5.73 billion units totaling 843 million manat during the reporting period.
Of the total number of transactions, 4.29 million transactions amounting to 746 million manat were implemented on debit cards via ATMs within the country, and around 520,000 transactions amounting to 56 million manat via POS-terminals.
As much as 830,000 transactions worth 128 million manat were made on credit cards during this period.
Of the total number of transactions on credit cards, 180,000 transactions worth 53 million manat were implemented via ATMs and there were 267,000 transactions worth 33 million manat via POS-terminals.
The number of payment cards in Azerbaijan decreased by 10.7 percent in April and hit up to 5.4 million units compared to the same period of 2015.
Of the total number of cards, 4.66 million units were debit cards, in particular, 2.44 million - social cards, 1.48 million - salary cards, 732,000 - other cards. The number of credit cards was 748,000.
As of May 1, 2016, as many as 2,553 ATMs operated in the country of which 1,412 are located in Baku and 1,141 in other cities and regions of the country. The total number of ATMs decreased by 89 units or 3.4 percent for the year compared to April 2015.
The number of POS-terminals amounted to 73,960 units of which 42,762 are installed in Baku and 31,198 units in other cities and regions as of late April 2016.
The number of POS-terminals decreased by 4,079 units or 5.2 percent for the year.
Stock market
The total turnover of exchange transactions on all instruments on Baku Stock Exchange hit 999.52 million manat in January-April 2016.
The volume of state securities market totaled 191.61 million manat, while the turnover of corporate securities market equaled 35.76 billion manat during the reporting period.
The volume of derivatives market hit 772.15 million manat.
The Baku Stock Exchange started to trade derivatives on a commodity basis on July 21, 2014.
The margin trading allows investors to buy and sell securities and financial instruments purchased from a broker under special conditions due to a temporary trading limit.
Comparative table on the results of trades on the state and corporate sectors at BSE:
|
Market segments |
Jan.-April 2016 |
|
|
Volume of transactions (AZN) |
Number of deals |
|
|
I. State securities market |
191 607 749,21 |
71 |
|
State bonds of finance ministry |
191 607 749,21 |
71 |
|
Initial placement |
109 547 175,26 |
42 |
|
secondary market |
82 060 573,95 |
29 |
|
Notes (Central Bank) |
- |
- |
|
Initial placement |
- |
- |
|
secondary market |
- |
- |
|
II. Market of shares |
5 904 405,74 |
568 |
|
Initial placement |
5 000 000,00 |
4 |
|
secondary market |
904 405,74 |
564 |
|
III. Debt market |
29 858 079,09 |
41 |
|
Mortgage bonds (Initial placement) |
- |
- |
|
Mortgage bonds (secondary market) |
15 014 457,08 |
7 |
|
Other corporate bonds (initial placement) |
3 961 450,45 |
19 |
|
Other corporate bonds (secondary market) |
10 882 171,56 |
15 |
|
- including market makers |
- |
- |
|
IV. Repo transactions |
0,00 |
0 |
|
Repo transactions of the Central Bank |
- |
- |
|
Other repo transactions |
- |
- |
|
V. Derivatives market |
772 151 148,13 |
12 975 |
|
- Currency |
738 972 168 |
11 149 |
|
- goods |
33 178 980 |
1 826 |
|
Total |
999 521 382,18 |
13 655 |
The Azerbaijani National Depository Center registered 19 off-exchange transactions in the amount of 3.5 million manats at a nominal value in April 2016.
The volume of off-exchange transactions increased threefold compared to March when 26 transactions worth 1.1 milion manat were registered.
The purchase-sale transactions of shares worth 11.5 million manat at a nominal value were registered last month or by 3.36 percent less than in March. For comparison: some 118 transactions worth 11.9 million manat were concluded in March.
Some 90 transactions on the additional issue worth 130 million manat (at a nominal value) were registered.
The volume of such transactions increased by 3.5 times for the month compared to March (19 transactions worth 37.1 million manat).
The National Depository Center was established on September 18, 1997.
According to the new law "On the Securities Market", which entered into force in July 2015, the National Depository Center is not under the Azerbaijani State Securities Committee any more.Azerbaijan has 37 banks, which have more than 700 branches and nearly 160 offices.