Currency reserves of the Central Bank of Azerbaijan (CBA) increased by $352.8 million (8.9 percent) up to $4,327.2 million in January 2017 as compared to December 2016.
CBA’s currency reserves decreased by 1.6 percent in January 2017 as compared to January 2016.
In 2016, CBA’s currency reserves decreased by $1,042.3 million or 20.78 percent as compared to 2015.
The reduction in CBA’s currency reserves began in July 2014. The reduction was at a slower rate (within the range of $20-50 million) at the beginning, but a sharp decline in the volume of reserves began in December 2014 due to an increase in demand for dollar in the country.
During 2016, the volume of currency reserves increased by 0.9 percent in March, by 1.35 percent in April, by 3.97 percent in May, by 0.7 percent in August and by 0.14 percent in November.
Azerbaijan’s Financial Market Supervisory Authority revoked the license of 12 credit unions in January 2017.
According to the CBA, those credit unions did not observe the reporting rules, moreover, they did not have a report of an external auditor for 2015.
The licenses of such credit unions as Arzu, Azeri Invest, Canub, Ceyhun, Compass, F.A.S., Hakari, Kredo-Invest, Real, Tarakama, Tural and Yardimli were revoked.
According to the report, Azerbaijan’s Financial Market Supervisory Authority, along with the banking sector, will continue to supervise the activity of non-bank credit institutions and take adequate measures in case of violation of prudential norms and legal requirements.
Currency market and manat rate
The CBA has been conducting a currency auction in a new format, namely, in the format of a unilateral sale of currency since January 2017. According to the new mechanism, the official rate of the manat on the next day is determined on the basis of the average rate for deals concluded with commercial banks in the interbank foreign exchange market and auctions.
The auctions will be held three times a week. From now on, the CBA will set in advance the monthly volume of the currency put up for auction. The four-percent margin (in accordance with the CBA official rate), used in the currency exchange rate set by the banks, is canceled.
The official exchange rate of the manat to the US dollar hit a historic minimum rate – 1.9165 AZN / USD in January 2017. The official exchange rate of the US dollar to manat was 1.5610 manat in early 2016. As of late 2016, the official exchange rate of the US dollar to manat reached a record rate – 1.7707 manat.
Thus, the highest value of the US currency after the devaluation of the manat was observed in early 2017.
Azerbaijani banks sold $121.52 million in January 2017, according to the CBA report.
The sale of dollars decreased by 11.7 percent in January 2017 compared to December 2016 and by 3.2 times compared to January 2016.
Banks bought $58.24 million in January 2017, which is by more than twice less than in December 2016 and by 3.8 times less than in January 2016.
The sale and purchase of the euro, as well as the sale of pounds sterling and the Russian ruble decreased in January 2017. The purchase of pounds sterling and the Russian ruble slightly increased compared to January 2016.
Comparative table on volume of foreign exchange operations in January 2016 and January 2017:
|
Currency |
Purchase (thousand standard unit) |
Sale (thousand standard unit) |
||
|
Jan. 2017 |
Jan. 2016 |
Jan. 2017 |
Jan. 2016 |
|
|
US dollar |
58 235,6 |
219 527,1 |
121 516,3 |
392 967,6 |
|
pound sterling |
295,4 |
258,3 |
1 769,8 |
2 868,1 |
|
euro |
5 578,4 |
7 470,8 |
12 555,8 |
27 828,1 |
|
Russian ruble |
773 677,5 |
578 885,7 |
123 281,6 |
185 829,3 |
Azerbaijani monetary market
The money supply rate (M2) (cash in circulation (outside banks) and remainders in the national currency on accounts of non-financial organizations, financial organizations (excluding credit organizations) and physical entities) amounted to 10,749.3 million manat in January 2017 increasing by 34.34 percent for the year.
The amount of cash money supply (M0) increased by 32.06 percent for the year from 4.485 million manat in January 2016 to 5,922.9 million manat in January 2017. M0 decreased by 7.12 percent compared to the previous month.
As of January 2017, Broad Money Supply (M3) totaled 21,034.9 million manat or by 5.5 percent more compared to January 2016 and by 0.7 percent more as of late December 2016.
The transaction money (M1) increased by 30.5 percent for the year.
The transaction money (M1) decreased by 8.64 percent and amounted to 8,185.5 million manat in January 2017 compared to late December 2016.
Parameters of monetary market, in million manat:
|
Monetary market parameters |
Volume, January 2017 |
|
Money mass in extensive understating (М3) |
21034,9 |
|
Money mass on manat (М2) |
10749,3 |
|
Cash in manat (М0) |
5922,9 |
|
Non-cash in manat |
4826,4 |
The bank reserves amounted to 2,174.3 million manat in Azerbaijan as of Feb. 1, 2017, which is by 5.6 percent more than in January 2017 (1,721.1 billion manat).
The report said that the broad monetary base in the country as of late January 2017 amounted to 8,731.9 million manat, which is by 30.7 percent more compared to the same period of 2016. For comparison: this figure amounted to 7.56 billion manat as of late December 2016.
According to the CBA, as of Jan. 1, 2017, the monetary base in manat amounted to 7.86 billion manat compared to 6.9 billion manat as of Jan.1, 2016.
The volume of currency in circulation amounted to 6.96 billion manat during the reporting period, while this figure stood at 5.42 billion manat as of Jan. 1, 2016.
The ratio of cash in circulation to monetary base as of Jan. 1, 2017 amounted to 75.4 percent, increasing by 3.8 percentage points compared to late Dec. 2015.
Azerbaijan’s loan market
As of January 2017, the credit organizations' loans reached 16,705.2 million manat. Despite a 21.2 percent annual decrease, the volume of issued loans increased by 1.58 percent for the month.
Loans in Azerbaijan’s national currency prevail in the structure of the issued loans.
Around 50.3 percent (8,406.8 million manat) of all loans account for those loans. During the year, their volume decreased by 17.5 percent. The remaining funds are foreign currency loans (49.7 percent, or 8,298.3 million manat), their volume decreased by 24.6 percent compared to January 2016.
This ratio was 73 and 27 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 Authority 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 2016.
Moreover, some banks have started to convert dollar-denominated loans into manat ones.
In January 2017, the volume of overdue loans in Azerbaijani national currency reached 738.9 million manat, which is by 12 percent more compared to January 2016.
The share of overdue loans in Azerbaijani manat reached 4.4 percent of the loan portfolio of the country’s banks and non-banking credit organizations as of January 2017, the report said.
Overdue loans in foreign currency amounted to 894.2 million manat, which is by 36.5 percent more during the same period, and their share reached 5.35 percent.
In general, the total volume of overdue loans in Azerbaijan amounted to 1,633.1 million manat (24.2 percent more for the year). The share of those loans reached 9.8 percent.
As of late January 2017, the volume of short-term loans amounted to 3,583.6 million manat (including overdue loans worth 374.2 million manat), the volume of long term loans amounted to 13,121.5 million manat (including 1,258.9 million manat of overdue loans).
According to the CBA, the credit portfolio of the state banks in the country amounted to 5,769.4 million manat with a specific weight of 34.5 percent, while private banks issued loans worth 10,481.4 million manat with a specific weight of 62.7 percent, where 4,425.1 million manat falls to the share of banks with foreign capital. The remaining 2.7 percent falls to the share of non-bank credit organizations, which issued 454.4 million manat.
Azerbaijani banks decreased the issuance of consumer loans by 0.76 percent in January 2017 compared to December 2016 and by 28 percent compared to January 2016, said the CBA report.
The report said the aggregate portfolio of consumer loans amounted to 5.814 million manat in late January.
The decline in the volume of consumer loans began after the first devaluation of manat in Azerbaijan (the US dollar rate increased by almost 34 percent on Feb. 21, 2015).
About 34.8 percent of the Azerbaijani banks’ total loan portfolio accounted for consumer loans as of late January 2017, while this figure was 38.1 percent in January 2016.
Trade and services (14.6 percent or 2.43 billion manat) ranked the second, and the construction and real estate sector (11.9 percent or 1.98 billion manat) ranked the third for their shares in total loan portfolio of the banks.
The share of loans for transportation and communication was 8.4 percent of total loans (nearly 1.39 billion manat), the share of loans for industrial and production sector was 7.8 percent (almost 1.3 billion manat), and the share of loans for agriculture and processing was 2.7 percent (447.6 million manat).
The loans issued in energy, chemistry, and natural resources decreased in January 2017.
Around 2.7 percent or 456.5 million manat accounted for this sector.
Lending to the Azerbaijani districts decreased by 25 percent up to 2.47 billion manat in January 2017 compared to January 2016.
According to the CBA report, the volumes of loans issued in the districts are being reduced amid general decline in lending in the country by 21.15 percent or 4.48 billion manat.
According to the CBA, the loans worth 14.2 billion manat were issued in Baku in January 2017 that is by 5.75 times more than in the districts. Around 6.8 billion manat (47.6 percent) accounted for the loans in national currency.
For comparison: as of January 2016, borrowers received loans worth almost 18 billion manat in Baku, of which 8 billion manat (45 percent) accounted for the loans in national currency.
The average annual interest rate on loans in the country as of January 2017 was 10.6 percent, while 9.1 percent in Baku.
|
Districts |
Lending volume |
Average interest rate |
|
|
Including manat |
|||
|
Absheron |
521 331,8 |
339 418,8 |
16,2 |
|
Aran |
609 831,7 |
386 097 |
22,4 |
|
Mountain Shirvan |
92 901,6 |
60 212,8 |
22 |
|
Ganja-Gazakh |
524 701,6 |
336 316,6 |
19,3 |
|
Guba-Khachmaz |
189 295,6 |
131 190 |
19,3 |
|
Lankaran |
217 528,7 |
129 650,3 |
21,7 |
|
Seki-Zagatala |
166 553,8 |
112 212 |
21,6 |
|
Upper-Karabakh |
38 923 |
34 348,5 |
17,6 |
|
Kalbajar-Lachin |
873,9 |
688,8 |
12,6 |
|
Nakhchivan |
109 453 |
107 202,7 |
|
The average interest rate on deposits in Azerbaijani banks decreased in national currency and foreign currency in January 2017 compared to January 2016, the report said.
The average rate on deposits in manat amounted to 12.28 percent in January 2017 compared to 12.05 percent in December 2016 and 13.36 percent in January 2016.
The average rate on loans in foreign currency amounted to 8.9 percent in January 2017 compared to 8.6 percent in December 2016 and 12.37 percent in January 2016.
The legal entities received manat loans at an average rate of 8.8 percent in January 2017 compared to 8.55 percent in December 2016 and 9.25 percent in January 2016.
The average rate on bank lending to the corporate clients in foreign currency amounted to 5.7 percent in January 2017 compared to 5.59 percent in December 2016 and 8.78 percent in January 2016.
As of January 2017, the average rate on manat loans to physical entities amounted to 15.79 percent compared to 15.71 percent in December 2016 and 17.5 percent as of January 2016.
The average rate on bank lending to the individual customers in foreign currency was 16.95 percent compared to 16.04 percent and 20.65 percent accordingly.
Mortgage lending
According to the CBA report, the banks issued mortgage loans worth 10.1 million manat in January 2017, which marks a revival in the mortgage lending market. The suspension of mortgage lending was connected with the AMF reorganization.
The total amount of refinancing the loans issued by banks earlier amounted to 0.7 million manat.
The placement of mortgage bonds worth 10 million manat also resumed in January 2017.
However, the AMF did not receive budgetary funds for social mortgage in January 2017.
The average monthly amount of the loan delivered by the AMF’s authorized banks was 41,331.5 manat in January 2017 (40,878.7 manat in January 2016). The average period of the loan is 280 months (280 months a year earlier). The average annual interest rate is 6.68 percent (6.71 percent a year earlier). The average monthly amount for payments is 297.6 manat (297.3 manat a year earlier).
According to the new mortgage loan issuance order, approved in June 2016, an ordinary mortgage loan will be issued only to Azerbaijani citizens and only in the national currency for a term from 3 years to 25 years, while preferential mortgage - up to 30 years to purchase a house, owned by the citizen. Interest rates on conventional mortgage must not exceed eight percent, while 4 percent per annum in preferential mortgage loan.
The maximum amount of the mortgage loan (including preferential) is determined by Azerbaijan Mortgage Fund JSC and must not exceed the cost of repaired housing with an average of 100 square meters in zone #7 in Baku. Annual interest rates on the loan are determined by the company’s Supervisory Board.
The amount of preferential mortgage loan must be 85 percent of the cost of purchased housing by the date of the loan issuance, except for cases when a borrower appeals to decrease the loan amount. The amount of conventional mortgage loan must not be less than 75 percent and more than 85 percent of the cost of purchased housing by the moment of the loan issuance, except for the cases when a borrower appeals to decrease the loan amount.
The monthly payment for a mortgage loan must not exceed 70 percent of a debtor's monthly income. The age of the borrower must not exceed the retirement age according to the legislation. An agreement on life insurance is required.
The family members of war victims, national heroes, internally displaced people, civil servants with at least a three years' experience, teachers of secondary schools with at least a five-year service term, PhDs, doctors of science and those having special merits in sport as well as the military with at least a three-year service term can use the preferential conditions. Each family having the right to such a mortgage loan can use it only once.
Around 20 out of 32 banks in the country, as well as 16 insurance companies [in total 21] and two appraisal organizations are the authorized banks of the Azerbaijan Mortgage Fund.
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 late January 2017, the total amount of deposits of physical and legal entities drawn by the Azerbaijani credit organizations amounted to 23.215 million manat.
The deposit base of banks increased by 2 percent in January 2017, while by 2.8 percent per annum.
The amount of deposits in the Azerbaijani national currency – manat reached 5,163.4 million manat as of January 2017, 2,328.1 million manat of which accounted for demand deposits, 2,835.3 million manat - term deposits, the report said.
According to the report, the deposits in freely convertible currency reached 18,051.5 million manat including 5.568 million manat - demand deposits, 12,483.5 million manat - term deposits.
Thus, as of February 1, 2017, 22.2 percent accounted for the deposits in manat, 77.8 percent of the total deposit base of banks accounted for foreign currency.
As of February 1, 2016, 17.5 percent accounted for the deposits in manat, 82.5 percent of the total deposit base of banks accounted for foreign currency.
According to the report, the physical entities' deposits reached 7,747.2 million manat in January 2017.
Most of the physical entities' deposits accounted for the ones in the foreign currency – 81.2 percent or 6,294.5 million manat, the report said.
According to the report, the population’s deposits increased by 4 percent for the month but decreased by 10.4 percent per annum.
The total volume of the legal entities’ deposits in Azerbaijani banks reached 15,467.8 million manat, which is by 13,967.6 million manat (10.7 percent) more than in January 2016, the report said.
As of late January 2017, the amount of the Azerbaijani financial organizations’ deposits reached 5,753.2 million manat compared to 7.167 million manat as of January 2016.
The amount of the Azerbaijani non-financial organizations’ deposits reached 9,714.6 million manat compared to 6,800.6 million manat as of January 2016.
The population’s bank deposits in Azerbaijani districts (except for Baku) totaled 516.17 million manat in January 2017, that is, 6.7 percent of all deposits, the report said.
According to the CBA report, the share of bank deposits in districts was 6.56 percent (567.03 million manat) in January 2016.
As of early February 2017, the amount of deposits in Baku amounted to 7.23 billion manat, while the deposits in the national currency - 1.2 billion manat (16.6 percent of all deposits).
According to the report, the national currency savings of the residents of Azerbaijani districts amounted to 257.04 million manat, that is, 49.8 percent of all deposits in the banks in the districts in the reporting period.
For comparison, this figure amounted to 210.8 million manat in January 2016, that is, 37.2 percent of total deposits in the districts.
As of January 2017, the average annual deposit rate throughout the country and Baku reached 4.7 percent.
Distribution of bank deposits in Azerbaijani districts:
|
Districts |
Amount of deposits (thousand manat) |
Average interest rate (%) |
|
Absheron |
175 163,8 |
5,8 |
|
Aran |
85 352,0 |
4,3 |
|
Mountain Shirvan |
13 032,2 |
5,7 |
|
Ganja-Gazakh |
100 455,2 |
5,9 |
|
Guba-Khachmaz |
30 228,2 |
5,8 |
|
Lankaran |
37 323,4 |
6,6 |
|
Seki-Zagatala |
30 307,2 |
4 |
|
Upper-Karabakh |
6 112,8 |
5,3 |
|
Kalbajar-Lachin |
373,4 |
4,8 |
|
Nakhchivan |
37 818,7 |
3,2 |
The average interest rate on deposits in Azerbaijani banks increased in national currency and decreased in foreign currency in January 2017 compared to December 2016, the report said.
The average rate on deposits in manat amounted to 6.19 percent in January 2017 compared to 6.5 percent in December 2016 and 7.75 percent in January 2016.
The average rate on deposits in foreign currency amounted to 4.4 percent in January 2017 compared to 4.66 percent in December 2016 and 7.67 percent in January 2016.
The banks drew deposits of legal entities in manat in the amount of 3.37 percent per annum in January 2017 compared to 3.91 percent in December 2016 and 5.86 percent in January 2016.
The funds on the accounts denominated in the foreign currency brought 3.05 percent to legal entities in January 2017, 3.34 percent in December 2016 and 8.66 percent in January 2016.
As of February 1, 2017, the average interest rate on deposits of physical entities in manat made up 10.22 percent compared to 10.31 percent as of late December 2016 and 8.9 percent as of January 2016.
The interest rates on deposits of physical entities in foreign currency are as follows: 5.25 percent in January 2017, 5.44 percent in December 2016 and 8.66 percent in January 2016.
Financial activity of banks
Azerbaijani banks’ liabilities to the CBA increased by 16.2 percent during a year, amounting to almost 6.8 billion manat as of Feb. 1, 2017, says the CBA report.
But as compared to early 2016, the liabilities decreased by 3 percent.
As of late January 2016, liabilities of commercial banks to the CBA amounted to almost 5.8 billion manat, while as of early 2017 they were nearly 7.046 billion manat.
The volume of the CBA foreign liabilities remains unchanged and totals 2.2 million manat.
During the year, the CBA’s official international reserves decreased by 1.6 percent from almost 4.39 billion manat to nearly 4.32 billion manat.
During the period, net liabilities of the CBA to the Azerbaijani government decreased by 47.5 percent and totaled nearly 3.4 billion manat.
The net liabilities of the CBA to the Azerbaijani government amounted to almost 6.5 billion manat in late January 2016.
Payment card market
The total turnover on payment cards via ATMs and POS-terminals amounted to 928 million manat in Azerbaijan in January 2017, that is by 5.7 percent more than in January 2016.
According to the report, the total number of transactions with payment cards reached 6,467 units increasing by 8.6 percent for the year.
The number of transactions on debit cards reached 5.582 million units totaling 794 million manat in the country and beyond the country during the reporting period.
Of the total number of transactions, 3.766 million transactions amounting to 659 million manat were implemented on debit cards via ATMs within the country, and around 809,000 transactions amounting to 71 million manat via POS-terminals.
As much as 885,000 transactions worth 134 million manat were made on credit cards in the country and beyond the country in January 2016.
Of the total number of transactions on credit cards, 171,000 transactions worth 49 million manat were implemented via ATMs and there were 334,000 transactions worth 31 million manat via POS-terminals.
The number of payment cards in Azerbaijan decreased by 0.91 percent in January 2017 and reached up to 5,343 units compared to January 2016.
Of the total number of cards, 4,712 units accounted for debit cards, in particular, 2,534 - social cards, 1,534 - salary cards, 644,000 - other cards. The number of credit cards was 629,000.
As of February 1, 2017, as many as 2,461 ATMs operated in the country of which 1,332 are located in Baku and 1,129 in other cities and districts of the country. The total number decreased by 112 units or 4.4 percent for the year compared to January 2016.
The number of POS-terminals is 71,806 units of which 40,518 are installed in Baku and 31,288 units in other cities and districts as of late 2016.
As of late January 2017, the number of POS-terminals is 71,164 units of which 40,003 are installed in Baku and 31,161 units in other cities and districts.
The number of POS-terminals has decreased by 7,288 units, that is 9.3 percent for the year.
Stock market
The total turnover of exchange transactions on all instruments at the Baku Stock Exchange reached over 1.05 billion manat in January 2017, that is, by over six times more than in January 2016.
The volume of the state securities market totaled 39.78 million manat (25.9 percent more for the year), while the turnover of corporate securities market reached 641.51 million manat (106 times more).
The volume of derivatives market reached 372.48 million manat (2.7 times more).
Comparative table on the trades results in the state and corporate sectors at the Baku Stock Exchange:
|
Market segments |
January 2017 |
January 2016 |
||
|
Volume of transactions (AZN) |
Number of deals |
Volume of transactions (AZN) |
Number of deals |
|
|
I. State Securities Market |
39 777 915,52 |
7 |
31 603 771,39 |
7 |
|
State bonds of finance ministry |
1 652 538,18 |
2 |
31 603 771,39 |
7 |
|
Initial placement |
- |
- |
- |
- |
|
secondary market |
1 652 538,18 |
2 |
31 603 771,39 |
7 |
|
Notes (Central Bank) |
38 125 377,34 |
5 |
0 |
0 |
|
Initial placement |
38 125 377,34 |
5 |
- |
- |
|
secondary market |
- |
- |
- |
- |
|
II. Market of shares |
600 345 790,39 |
115 |
355 823,80 |
72 |
|
Initial placement |
600 000 000,21 |
2 |
- |
- |
|
secondary market |
345 790,18 |
113 |
355 823,80 |
72 |
|
III. Debt market |
41 165 893,00 |
80 |
5 693 072,33 |
7 |
|
Mortgage bonds (Initial placement) |
10 000 000,00 |
1 |
- |
- |
|
Mortgage bonds (secondary market) |
- |
- |
1 399 428,83 |
1 |
|
Other corporate bonds (initial placement) |
- |
- |
2 758 510,50 |
5 |
|
Other corporate bonds (secondary market) |
31 165 893,00 |
79 |
1 535 133,00 |
1 |
|
- including market makers |
545 340 |
- |
1 687 722,86 |
- |
|
IV. REPO transactions |
0,00 |
0 |
0,00 |
0 |
|
Repo transactions of the Central Bank |
- |
- |
- |
- |
|
Other repo transactions |
- |
- |
- |
- |
|
V. Derivatives market |
372 483 900,91 |
5087 |
136 729 583,00 |
1653 |
|
- currency |
358 378 319,14 |
4 850 |
128 544 369 |
1 390 |
|
- goods |
14 105 581,77 |
237 |
8 185 214 |
263 |
|
Total |
1 053 773 499,82 |
5 289,00 |
174 382 250,52 |
1 739,00 |
The Azerbaijani National Depository Center registered 13 off-exchange transactions in the amount of 641,730 manat at face value in January 2017.
The National Depository Center registered 29 deals worth almost 1.3 million manat and the volume of off-exchange transactions decreased by over twofold compared to December 2016.
Around 183 purchase-sale transactions of shares in the amount of 17.88 million manat at face value were registered by the National Depository Center in January 2017, which is by 19.6 less than in December 2016.
For comparison, the National Depository Center registered 152 deals worth 22.23 million manat in December 2016.
Around 9 transactions on the additional issue worth almost 648.56 million manat (face value) were also registered. The volume of such deals increased by four times for the month compared to December 2016 (49 deals worth 167.61 million manat).