Currency reserves of the Central Bank of Azerbaijan (CBA) increased by approximately $1,034.8 million (25 percent) in September 2017 as compared to September 2016, and amounted to $5,167.5 million.
The CBA reserves have increased by $66.3 million (1.3 percent) for the month and by $1,193.1 million (30 percent) since early 2017.
Currency reserves of the CBA decreased by more than $1 billion or by 20.78 percent in 2016 as compared to 2015. CBA’s currency reserves started to decrease in July 2014. The reduction was at a slower pace (within a range of $20 million to $50 million) at the beginning, but a sharp decline began in December 2014 due to an increase in demand for US dollars in the country.
During 2016, the CBA currency reserves increased by 0.9 percent in March, 1.35 percent in April, 3.97 percent in May, 0.7 percent in August, and 0.14 percent in November.
Currency market and manat rate
A fully floating exchange rate regime has been observed in Azerbaijan since early 2017. During this time the CBA did not resort to serious interventions to maintain the manat rate. First, there was a period of destabilization, which was connected with the expectations of the market participants. This led to a significant decrease in the cost of manat.
However, then the market itself settled the rate and it stabilized. Today, the foreign exchange market is a market of supply, rather than demand. The pressure is made to appreciate the manat rate. Taking into account Azerbaijan's strategic goals, appreciation of the manat in the medium term may create problems for the balance of payments, given the current measures to reduce imports and support exports.
AZN/USD rate increased by 3.98 percent in January-September 2017.
AZN/USD rate increased by 0.047 percent in September 2017, while decreased by 0.0059 percent in August 2017.
AZN/USD average rate was 1.7007 manat in September 2017 compared to 1.7008 manat in August 2017.
AZN/EUR rate decreased by 7.41 percent in January-September 2017.
AZN/EUR rate increased by 0.88 percent in September 2017 (in August, AZN/EUR rate decreased by 1.21 percent).
Azerbaijani monetary market
The amount of cash money supply (M0) increased by 24.8 percent for the year from 5.68 billion manats to 7.09 billion manats, the Azerbaijani Central Bank said in a report.
M0 increased by 1.3 percent compared to the previous month.
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 individuals) amounted to 11.46 billion manats in September 2017 increasing by 2.9 percent for the month and by 14.9 percent for the year.
As of September 2017, Broad Money Supply (M3) totaled 21.13 billion manats or by 5 percent more compared to September 2016 and by 2.8 percent more than in late August 2017.
The transaction money (M1) increased by 17.4 percent for the year and by 4.3 percent in September 2017 and amounted to 9.8 billion manats.
Parameters of monetary market, in million manats:
|
Monetary market parameters |
Volume, September 2017 |
|
Money mass in extensive understating (М3) |
21,133.7 |
|
Money mass on manat (М2) |
11,464.5 |
|
Cash in manat (М0) |
7,092.3 |
|
Non-cash in manat |
2,708.4 |
As of October 1, 2017, bank reserves totaled 2.28 billion manats in Azerbaijan, increasing by 28.1 percent (1.78 billion manats) as compared to September 2016, according to a report of the Central Bank of Azerbaijan (CBA).
As of late September 2017, the expanded monetary base amounted to 10.03 billion manats in the country (an increase by 25.5 percent as compared to late September 2016). This figure was 7.99 billion manats as of September 2016.
As of October 1, 2017, monetary base totaled 8.67 billion manats in Azerbaijan as compared to 6.81 billion manats in early October 2016.
During the period, the amount of cash in circulation was 7.71 billion manats, while this figure was 6.19 billion manats as of October 1, 2016.
The ratio of cash in circulation to monetary base as of October 1, 2017 amounted to 76.8 percent, decreasing by 0.8 percentage points compared to late September 2016.
Azerbaijan’s loan market
As of early October 2017, the Azerbaijani credit organizations’ loans totaled 12.44 billion manats, which is by 25.9 percent less as compared to the same period of 2016.
The volume of loans, issued by the Azerbaijani credit organizations, increased by 0.8 percent for the month, said the report.
Loans in Azerbaijan’s national currency, the manat, prevail in the structure of the issued loans.
Some 58 percent (7.21 billion manats) of all loans account for those loans. Their volume decreased by 18.5 percent during the year. Foreign currency loans account for 42 percent or 5.22 billion manats. Their volume decreased by 34.3 percent as compared to September 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.
In September 2017, the volume of overdue loans in Azerbaijani national currency reached 949 million manats, which is by 24.3 percent more as compared to the same period of 2016.
The share of overdue loans in Azerbaijani manats reached 7.6 percent of the loan portfolio of the country’s banks and non-banking credit organizations in September 2017, the report said.
In September 2017, overdue loans in foreign currency amounted to 908.1 million manats, which is by 12.9 percent more as compared to the same period of 2016, and the share of these loans reached 7.3 percent.
In general, the total volume of overdue loans in Azerbaijan reached 1.86 billion manats (an increase by 16.3 percent for the year). Their share in the loan portfolio of the country’s banks and non-banking credit organizations as of October 2017 reached 15 percent.
As of late September 2017, the volume of short-term loans amounted to 2.45 billion manats (including overdue loans worth 349.6 million manats), the volume of long-term loans amounted to 9.99 billion manats (including overdue loans worth 1.51 billion manats).
According to the CBA, the loan portfolio of the state banks in Azerbaijan amounted to 2.35 billion manats, and their share in the loan portfolio of the country’s banks and non-banking credit organizations was 18.9 percent.
The country’s private banks issued loans in the amount of 9.64 billion manats, and their share accounted for 77.5 percent.
Some 3.78 billion manats of these loans account for the share of banks with foreign capital.
The remaining 3.6 percent account for the share of non-bank credit organizations, which issued loans in the amount of 452.3 million manats.
Lending to agriculture and processing industry totaled 461.9 million manat in Azerbaijan in January-September of 2017. The specific weight of these spheres in the credit portfolio of banks and non-bank credit organizations was 3.7 percent.
Despite Azerbaijan has great potential in agriculture, the share of this sphere in the loan portfolio of banks remains rather low. This is stipulated by the peculiarities of the agricultural sector, such as the unpredictability of natural and climatic conditions, the low turnover of capital in this sphere, the high level of risks and so on. Moreover, most of the individuals involved in agriculture are small entrepreneurs and farmers who have problems with collateral.
Nevertheless, amid the fall in oil prices, the Azerbaijani government pays special attention to the agricultural sector.
The development of this sphere is one of the priorities of the country. One of the strategic road maps is devoted to this sphere, which implies the entire development of the Azerbaijani economy for the coming years.
So, in the future it is planned to simplify the lending procedure of agriculture projects, which are sent to the banks upon the recommendation of business incubators, as well as introduce special benefits and other issues.
Loans worth 2.07 billion manats were issued to the population in Azerbaijani districts in September 2017, that is, 16.6 percent of the total loan portfolio of banks, which is by 18.2 percent less than in September 2016, according to the report of the Central Bank of Azerbaijan (CBA).
According to the CBA, in early October 2017 the loans worth 10.4 billion manats were issued in Baku, which is by fivefold more than in the districts. Almost 5.7 billion manats (54.74 percent of total lending volume in Baku) accounted for the loans in national currency.
The average annual interest rate on loans in the country as of September 2017 was 11.8 percent, while 10.4 percent in Baku.
|
Districts |
Lending volume (thousand manats) |
Average interest rate |
|
|
In total |
Including manats |
||
|
Absheron |
453,405.5 |
334,070 |
15.5 |
|
Aran |
498,422.6 |
360,750.8 |
22.3 |
|
Mountain Shirvan |
72,407.4 |
52,128.3 |
21.5 |
|
Ganja-Gazakh |
427,362.5 |
313,967 |
18.9 |
|
Guba-Khachmaz |
144,635.5 |
113,529.9 |
19.8 |
|
Lankaran |
175,748.3 |
123,609.3 |
21.7 |
|
Sheki-Zagatala |
153,147.6 |
102,888.6 |
20.1 |
|
Upper-Karabakh |
40,192.1 |
35,126.5 |
18.6 |
|
Kalbajar-Lachin |
705 |
533.6 |
14.5 |
|
Nakhchivan |
104,802.3 |
103,337.8 |
8.6 |
The average interest rate on deposits in Azerbaijani banks increased in national currency and decreased in foreign currency in September 2017, the Azerbaijani Central Bank’s report said.
According to the report, the average rate on bank deposits in manats made up 10.15 percent in September 2017 compared to 9.49 percent in August 2017 and 8.75 percent in September 2016.
The average rate on deposits in foreign currency amounted to 3.37 percent in September 2017 compared to 3.57 percent in August 2017 and 5.12 percent in September 2016, the report said.
According to the report, the banks drew deposits of legal entities in manats in the amount of 5.67 percent per annum in September 2017 compared to 4.84 percent and 6.38 percent in August 2017 and September 2016 accordingly.
The funds on the accounts denominated in the foreign currency brought 1.36 percent to legal entities in September 2017, 2.78 percent in August 2017 and 3.77 percent in September 2016, the report said.
As of October 1, 2017, the average interest rate on deposits of physical entities in manats made up 11.75 percent compared to 11.72 percent as of late August 2017 and 9.94 percent in September 2016, the report said.
According to the report, the interest rates on deposits of physical entities in foreign currency are as follows: 4.15 percent in September 2017, 4.2 percent in August 2017 and 6.02 percent in September 2016.
Mortgage lending
Azerbaijan Mortgage Fund (AMF) issued loans worth 17.2 million manats in September 2017, according to the report of the Central Bank of Azerbaijan (CBA).
It should be recalled that the issuance of mortgage loans was suspended in the same period last year due to the restructuring of the AMF.
According to the CBA report, in September 2017, the volume of refinancing of loans issued by banks earlier amounted to 11.8 million manats. Since the beginning of the year, 35.4 million manats has been transferred from the state budget to the AMF.
The average monthly amount of the loan delivered by the AMF’s authorized banks was 43,594.4 manats in September 2017 (40,882.6 manats in September 2016). The average period of the loan is 281 months (280 months a year earlier). The average annual interest rate is 6.64 percent (6.7 percent a year earlier). The average monthly amount for payments is 311.4 manats (295.8 manats a year earlier).
In general, AMF’s authorized lending institutions have issued 20,569 mortgage loans worth 892.78 million manats since 2006 and up till now.
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 not exceed 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 24 out of 31 banks in the country, as well as 16 insurance companies [in total 21] and 11 appraisal organizations are the authorized banks of the Azerbaijan Mortgage Fund.
Azerbaijan’s banking sector
As of September 2017, the total volume of deposits of physical and legal entities in Azerbaijani banks amounted to 19.48 billion manats, according to the report of Azerbaijan’s Central Bank.
The deposit base of banks decreased by 7.3 percent in September 2017 and by 14.7 percent for the year.
The volume of deposits in the Azerbaijani national currency, the manat, reached 4.94 billion manats as of September 2017, 2.79 billion manats of which accounted for demand deposits, and 2.15 billion manats - term deposits, the report said.
The volume of deposits in the Azerbaijani national currency, the manat, reached 14.54 billion manats as of September 2017, 6.06 billion manats of which accounted for demand deposits, and 8.48 billion manats - term deposits, the report said.
Thus, as of October 1, 2017, 25.4 percent accounted for the deposits in manats, and 74.6 percent of the total deposit base of banks accounted for the deposits in foreign currency.
According to the report, the physical entities' deposits exceeded 7.02 billion manats in September 2017. Most of the physical entities' deposits accounted for the ones in the foreign currency – 71.8 percent or 5.04 billion manats, the report said.
According to the report, the population’s deposits increased by 1.7 percent for the month and decreased by 10.1 percent for the year.
The total volume of the legal entities’ deposits in Azerbaijani banks reached 12.46 billion manats or by 17.5 percent (15.03 billion manats) less than in September 2016, the report said.
As of October 1, 2017, the volume of the Azerbaijani financial organizations’ deposits reached 2.13 billion manats compared to 5.87 billion manats as of October 2016.
A sharp decrease in the deposits of financial organizations is connected with the restructuring of the International Bank of Azerbaijan
The volume of the Azerbaijani non-financial organizations’ deposits reached 10.33 billion manats compared to 9.16 billion manats as of September 2016.
As of late September, 2017, the population’s bank deposits in Azerbaijani districts (except for Baku) totaled 365.53 million manats, which is 52.97 percent more than in the same period last year, according to the report of the Central Bank of Azerbaijan (CBA).
The volume of foreign currency deposits in Azerbaijani districts, on the contrary, decreased by 21.8 percent for the year and amounted to 185.99 million manats, according to the report.
In general, the population’s bank deposits in Azerbaijani districts amounted to 551.5 million manats, which is a 15.7 percent increase as compared to late September 2016. Some 7.85 percent of all bank deposits accounted for the share of Azerbaijani districts.
The volume of deposits in the districts increased amid the decrease in deposits in the country.
In September 2016, the population kept deposits worth 7.8 billion manats in the banks.
As of October 1, 2017, this figure decreased to 7.02 billion manats.
The average annual deposit rate throughout the country reached 4.5 percent, and on Baku – 4.4 percent in September 2017.
Distribution of bank deposits in Azerbaijani districts:
|
Districts |
Amount of deposits (thousand manats) |
Average interest rate (%) |
|
Absheron |
159,476 |
6.8 |
|
Aran |
103,594.8 |
4.3 |
|
Mountain Shirvan |
14,056.2 |
4.8 |
|
Ganja-Gazakh |
116,656.3 |
6.2 |
|
Guba-Khachmaz |
40,138.6 |
6.3 |
|
Lankaran |
41,954.3 |
6.7 |
|
Sheki-Zagatala |
32,608.9 |
4.3 |
|
Upper-Karabakh |
7,393.9 |
3.4 |
|
Kalbajar-Lachin |
1,430.6 |
9.5 |
|
Nakhchivan |
34,214.4 |
2.5 |
The average interest rate on loans increased in national and foreign currencies in Azerbaijani banks in September 2017 compared to September 2016, the report of the Azerbaijani Central Bank (CBA) said.
According to the report, the average rate on loans in manats amounted to 13 percent in September 2017 compared to 12.42 percent in September 2016.
The average rate on loans in freely convertible currency amounted to 10.29 percent in September 2017 compared to 10.62 percent in August 2017 and 10.1 percent in September 2016, the report said.
According to the report, the legal entities received manat loans at an average rate of 8.98 percent in September 2017 compared to 9.02 percent in August 2017 and 8.3 percent in September 2016.
The average rate on bank lending to the corporate clients in foreign currency amounted to 7.2 percent in September 2017 compared to 7.51 percent in August 2017 and 6.08 percent in September 2016, the report said.
As of September 2017, the average rate on manat loans to the individuals amounted to 16.1 percent which is similar with August 2017 and 16.48 percent as of September 2016, the report said.
The average rate on bank lending to the individual customers in foreign currency was 16.16 percent compared to 16.25 percent and 18.59 percent accordingly, the report said.
Financial activity of banks
In September 2017, the profit of Azerbaijani banks amounted to 479.7 million manat, which is 36.9 percent more than in the previous month, the Financial Market Supervisory Authority of Azerbaijan (FIMSA) said in a report.
Azerbaijani banks completed 2016 with a loss of almost 1.7 billion manat.
Income of banks amounted to 2.22 billion manat, expenses - 1.4 billion manat in January-September 2017. As a result, the operating profit of banks amounted to 820.8 million manat.
Moreover, 321.3 million manat accounted for expenses related to the creation of reserves to cover possible losses. Other expenses of banks amounted to 2.9 million manat, while profit tax - 22.7 million manat.
There are 31 banks in Azerbaijan, including two state-owned banks.
Payment card market
The turnover of payment card transactions carried out via ATMs and POS-terminals amounted to 1.18 billion manats in Azerbaijan in September 2017, which is by 13.5 percent more than in September 2016, said the report of the Central Bank of Azerbaijan (CBA).
According to the report, the total number of payment card transactions reached 7.91 million in September 2017, increasing by 16.7 percent for the year.
The number of debit card transactions reached 7.11 million totaling 1.05 billion manats during the reporting period. Meanwhile, 4.82 million debit card transactions worth 870 million manats were carried out via ATMs, and 595,000 transactions worth 91 million manats via POS-terminals.
The number of payment cards rose by 9.3 percent up to 5.65 million in September 2017 as compared to the same period of 2016.
As of October 1, 2017, 2,486 ATMs operated in the country, 1,348 of which are located in Baku and 1,138 – in other cities and districts of the country. The total number of ATMs has decreased by 59 units or 2.3 percent for the year.
As of late September 2017, the number of POS-terminals amounted to 67,611 units in the country, 38,127 of which are installed in Baku and 29,484 units in other cities and districts of the country. The number of POS-terminals has decreased by 6,793 units or 9.1 percent in Azerbaijan for the year.
Stock market
Azerbaijan’s National Depository Center CJSC has registered 1,950 stock exchange transactions for the purchase and sale of securities worth 697.99 million manats in January-September 2017 that is 3.3 times more than in the same period of 2016, says the statistical data posted on the Center’s website Oct. 16.
According to the data, 313 off-exchange transactions worth almost 725.9 million manats were registered in January-September 2017 (2.1 times more for the year).
Meanwhile, 686 transactions worth 4.3 billion manats were registered on additional emission in the period. The volume of such transactions has decreased by 3.4 percent, as compared to January-September 2016.
Volume of transactions in January-September 2017:
|
Concluded agreements |
Exchange transactions, number |
Exchange transactions, in manats |
Off-exchange transactions, number |
Off-exchange transactions, volume |
Transactions on additional emission, number |
Transactions on additional emission, volume |
|
|
January |
2 |
183 |
17,879,720 |
13 |
641,720 |
9 |
648,562,500 |
|
February |
3 |
253 |
155,609,805 |
32 |
184,170,140 |
34 |
270,400,100 |
|
March |
2 |
149 |
51,428,900 |
71 |
313,018 |
54 |
202,992,500 |
|
April |
4 |
196 |
68,580,169 |
21 |
4,323,223.4 |
80 |
235,991,900 |
|
May |
3 |
221 |
52,125,408 |
29 |
270,117,784 |
86 |
351,035,010 |
|
June |
2 |
174 |
82,323,634 |
30 |
2,750,019 |
74 |
518,006,195 |
|
July |
2 |
218 |
68,982,925 |
64 |
8,840,871 |
88 |
524,714,390 |
|
August |
4 |
253 |
33,180,179 |
31 |
250,893,245 |
118 |
760,500,000 |
|
September |
1 |
151 |
38,898,587 |
22 |
3,811,990 |
143 |
786,478,385 |