Currency reserves of the Central Bank of Azerbaijan (CBA) increased by about $1,195.2 million (29.8 percent) up to $5,200.7 million in October 2017 as compared to the same period of 2016, according to statistical data posted on the CBA website.
During the month, CBA reserves rose by 33.2 million (0.6 percent), while since early 2017 increased by 1,226.3 million (30.9 percent).
Currency reserves of CBA decreased by more than $1 billion or 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-October 2017.
AZN/USD rate was stable in October 2017, but increased by 0.047 percent in September 2017.
AZN/USD average rate was 1.7002 manat in October 2017 compared to 1.7007 manat in September 2017.
AZN/EUR rate increased by 1.3 percent in October 2017.
AZN/EUR rate increased by 0.88 percent in September 2017 (in September, AZN/EUR rate increased by 0.88 percent).
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 individuals) amounted to 11.55 billion manat in October 2017 increasing by 0.8 percent for the month and by 8.1 percent for the year, the CBA report said.
The amount of cash money supply (M0) increased by 23.5 percent for the year from 5.74 billion manat to 7.09 billion manat.
As of October 2017, Broad Money Supply (M3) totaled 21.45 billion manat or by 6.6 percent more compared to October 2016 and by 1.5 percent more than in late September 2017.
The transaction money (M1) increased by 19.1 percent for the year and decreased by 0.8 percent in October 2017 and amounted to 9.72 billion manat.
Parameters of monetary market, in million manat:
|
Monetary market parameters |
Volume, October 2017 |
|
Money mass in extensive understating (М3) |
21,449.6 |
|
Money mass on manat (М2) |
11,546.7 |
|
Cash in manat (М0) |
7,089.8 |
|
Non-cash in manat |
4,456.9 |
As of November 1, 2017, bank reserves totaled 2.11 billion manat in Azerbaijan, decreasing by 14.9 percent (2.48 billion manat) as compared to October 2016.
According to the CBA, as of late October 2017, the expanded monetary base amounted to 9.83 billion manat in the country (an increase by 11.8 percent as compared to late October 2016). This figure was 8.79 billion manat as of late October 2016.
As of November 1, 2017, monetary base totaled 8.53 billion manat in Azerbaijan as compared to 7.45 billion manat in early November 2016.
During the period, the amount of cash in circulation was 7.67 billion manat, while this figure was 6.29 billion manat as of November 1, 2016.
The ratio of cash in circulation to monetary base as of November 1, 2017 amounted to 78.1 percent, increasing by 6.6 percentage points compared to late October 2016.
Azerbaijan’s loan market
As of early November 2017, the Azerbaijani credit organizations’ loans totaled 12.15 billion manat, which is by 23.2 percent less as compared to the same period of 2016, the CBA report said.
The volume of loans, issued by the Azerbaijani credit organizations, decreased by 2.3 percent for the month, said the report.
Loans in Azerbaijan’s national currency, the manat, prevail in the structure of the issued loans.
Some 58.8 percent (7.15 billion manat) of all loans account for those loans. Their volume decreased by nearly 16 percent during the year. Foreign currency loans account for 41.2 percent or about 5 billion manat. Their volume decreased by 31.6 percent as compared to October 2016.
In October 2017, the volume of overdue loans in Azerbaijani national currency reached 945 million manat, which is by 49.5 percent more as compared to the same period of 2016.
The share of overdue loans in Azerbaijani manat reached 7.8 percent of the loan portfolio of the country’s banks and non-banking credit organizations in October 2017, the report said.
In October 2017, overdue loans in foreign currency amounted to 944.6 million manat, which is by 27.1 percent more as compared to the same period of 2016, and the share of these loans reached 7.8 percent.
In general, the total volume of overdue loans in Azerbaijan reached 1.89 billion manat. Their share in the loan portfolio of the country’s banks and non-banking credit organizations reached 15.5 percent.
As of late October 2017, the volume of short-term loans amounted to 2.28 billion manat (including overdue loans worth 378.1 million manat), the volume of long-term loans amounted to 9.87 billion manat (including overdue loans worth 1.51 billion manat).
According to the CBA, the loan portfolio of the state banks in Azerbaijan amounted to 2.14 billion manat, and their share in the loan portfolio of the country’s banks and non-banking credit organizations was 17.6 percent.
The country’s private banks issued loans in the amount of 9.59 billion manat, and their share accounted for 78.9 percent.
Some 3.77 billion manat of these loans account for the share of banks with foreign capital.
The remaining 3.5 percent account for the share of non-bank credit organizations, which issued loans in the amount of 420.2 million manat.
In January-October 2017, lending to agriculture and processing sector in Azerbaijan totaled 454.4 million manat, the CBA said in a report.
The share of agriculture and processing sphere in the loan portfolio of banks and non-bank credit organizations in Azerbaijan was 3.7 percent, according to the report.
In October 2017, volumes of lending to agriculture slightly decreased (by 1.6 percent) as compared to the volumes in late September, but still remain the highest since December 2015.
The biggest share of loans in Azerbaijan still accounts for consumer lending - 4.68 billion manat with a specific weight of 38.5 percent. Compared to the same period of last year, the volume of consumer loans decreased by 20.8 percent, and by 4.1 percent for the month.
Sector of trade and services (with a specific weight of 17.4 percent, or 2.12 billion manat) ranks second, followed by the transport and communications sector (8.8 percent, or 1.07 billion manat).
As of November 1, 2017, loans for industry and production amounted to 624.1 million manat (5.1 percent). The share of construction and real estate sector accounted for 4.5 percent (543.9 million manat), and the share of energy, chemistry and natural resources spheres accounted for 2.6 percent (319.5 million manat).
Loans worth 2.06 billion manat were issued to the population in Azerbaijani districts in October 2017, that is, 16.95 percent of the total loan portfolio of banks, which is by 16.9 percent less than in October 2016, according to the CBA report.
According to the CBA, in early November 2017 the loans worth 10.09 billion manat were issued in Baku, which is by 4.9 times more than in the districts. Almost 5.61 billion manat (55.6 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 October 2017 was 12 percent, while 10.6 percent in Baku.
|
Districts |
Lending volume (thousand manat) |
Average interest rate |
|
|
In total |
Including manat |
||
|
Absheron |
458,214.6 |
340,128.9 |
15.5 |
|
Aran |
494,574.6 |
360,211.7 |
22.6 |
|
Mountain Shirvan |
71,875.7 |
52,183.6 |
21.5 |
|
Ganja-Gazakh |
430,302 |
31,8781.7 |
18.8 |
|
Guba-Khachmaz |
144,187.1 |
113,778.1 |
19.9 |
|
Lankaran |
173,701.8 |
122,853.8 |
22.1 |
|
Sheki-Zagatala |
146,516.5 |
101,221.1 |
20.5 |
|
Upper-Karabakh |
41,576.2 |
36,537.1 |
18.9 |
|
Kalbajar-Lachin |
746.2 |
578 |
15.2 |
|
Nakhchivan |
102,436 |
101,022.4 |
8.2 |
Mortgage lending
The bank-agents of the Azerbaijan Mortgage Fund (AMF) issued 216 loans worth around 13 million manat in October 2017.
Since 2006 up till now, 20,417 mortgage loans worth 882.39 million manat have been issued by the AMF’s authorized credit organizations.
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 Mortgage Fund (AMF) issued loans worth 18.6 million manat in October 2017, according to the CBA report.
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 October 2017, the volume of refinancing of loans issued by banks earlier amounted to 14.4 million manat. Since the beginning of the year, 40 million manat 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 43,915.1 manat in October 2017 (40,882.6 manat in October 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 313.5 manat (295.7 manat a year earlier).
In general, AMF’s authorized lending institutions have issued 20,859 mortgage loans worth 915.14 million manat 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 October 2017, the total volume of deposits of physical and legal entities in Azerbaijani banks amounted to 19.7 billion manat, according to the CBA report.
The deposit base of banks increased by 1.1 percent in October 2017 and decreased by 11.4 percent for the year.
The volume of deposits in the Azerbaijani national currency, the manat, reached 5.03 billion manat as of October 2017, 2.73 billion manat of which accounted for demand deposits, and 2.3 billion manat - term deposits, the report said.
The volume of deposits in the freely convertible currency reached 14.67 billion manat as of Ocotber 2017, 6.33 billion manat of which accounted for demand deposits, and 8.33 billion manat - term deposits, the report said.
Thus, as of November 1, 2017, 25.5 percent accounted for the deposits in manat, and 74.5 percent of the total deposit base of banks accounted for the deposits in foreign currency.
According to the report, the physical entities' deposits exceeded 7.28 billion manat in October 2017. Most of the physical entities' deposits accounted for the ones in the foreign currency – 69.9 percent or 5.09 billion manat, the report said.
According to the report, the population’s deposits increased by 3.7 percent for the month and decreased by 1.8 percent for the year.
The total volume of the legal entities’ deposits in Azerbaijani banks reached 12.42 billion manat or by 13.8 percent (14.41 billion manat) less than in October 2016, the report said.
As of November 1, 2017, the volume of the Azerbaijani financial organizations’ deposits reached 2.05 billion manat compared to 5.32 billion manat as of November 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 10.36 billion manat compared to 9.5 billion manat as of October 2016.
As of Nov. 1, 2017, the population’s bank deposits in Azerbaijani districts (except for Baku) totaled 540.14 million manat, which is 7.4 percent of all bank deposits, according to the CBA report.
For comparison, as of late October, 2016, the population’s bank deposits in Azerbaijani districts (except for Baku) totaled 490.36 million manat, which is 6.6 percent of all bank deposits.
The volume of deposits in the districts in October 2017 decreased amid the decrease in deposits in the country.
In October 2016, the population kept deposits worth 7.41 billion manat in the banks.
As of November 1, 2017, this figure decreased to 7.28 billion manat.
As of early November 2017, the volume of population’s bank deposits in Baku amounted to 6.73 billion manat.
The average annual deposit rate throughout the country reached 4.5 percent, and on Baku – 4.4 percent in October 2017.
Distribution of bank deposits in Azerbaijani districts:
|
Districts |
Amount of deposits (thousand manat) |
Average interest rate (%) |
|
Absheron |
159,061.1 |
7 |
|
Aran |
95,181.8 |
4.8 |
|
Mountain Shirvan |
12,440.4 |
5.2 |
|
Ganja-Gazakh |
118,320.1 |
6.4 |
|
Guba-Khachmaz |
38,428.5 |
6.7 |
|
Lankaran |
39,148.5 |
6 |
|
Sheki-Zagatala |
33,106.9 |
4.4 |
|
Upper-Karabakh |
8,302.1 |
3.4 |
|
Kalbajar-Lachin |
1,365.3 |
9.3 |
|
Nakhchivan |
34,783.1 |
2.4 |
Average interest rates on bank loans increased in national and foreign currencies in Azerbaijan in October 2017 compared to the same period last year, the CBA report said.
The rates on manat loans increased for both individuals and legal entities, according to the report. Meanwhile, the rates on foreign currency loans increased for individuals and decreased for legal entities.
Comparative table of interest rates on loans in national and foreign currencies:
|
Average interest rates |
Rates on loans for individuals |
Rates on loans for legal entities |
|
|
October 2016 |
|||
|
Manat loans |
12.24 |
8.33 |
16.2 |
|
Foreign currency loans |
9.63 |
5.74 |
18.45 |
|
September 2017 |
|||
|
Manat loans |
13 |
8.98 |
16.1 |
|
Foreign currency loans |
10.29 |
7.2 |
16.16 |
|
October 2017 |
|||
|
Manat loans |
13.14 |
8.99 |
16.3 |
|
Foreign currency loans |
10.53 |
7.23 |
17.34 |
The average interest rate on deposits in Azerbaijani banks increased in national currency and decreased in foreign currency in October 2017, the CBA report said.
According to the report, the average rate on bank deposits in manat made up 10.33 percent in October 2017 compared to 10.15 percent in September 2017 and 6.31 percent in October 2016.
The average rate on deposits in foreign currency amounted to 3.33 percent in October 2017 compared to 3.37 percent in September 2017 and 4.72 percent in October 2016, the report said.
According to the report, the banks drew deposits of legal entities in manat in the amount of 5.42 percent per annum in October 2017 compared to 5.67 percent and 3.77 percent in September 2017 and October 2016 accordingly.
The funds on the accounts denominated in the foreign currency brought 1.37 percent to legal entities in October 2017, 1.36 percent in September 2017 and 3.2 percent in October 2016, the report said.
As of November 1, 2017, the average interest rate on deposits of physical entities in manat made up 11.83 percent compared to 11.75 percent as of late September 2017 and 10.09 percent in October 2016, the report said.
According to the report, the interest rates on deposits of physical entities in foreign currency are as follows: 4.1 percent in October 2017, 4.15 percent in September 2017 and 5.64 percent in October 2016.
Financial activity of banks
As of early November, 2017, profit of banks in Azerbaijan amounted to 549.6 million manat, which is by 14.6 percent more than as of early October 2017, according to the report of the country’s Financial Market Supervisory Authority.
Azerbaijani banks completed 2016 with a loss of nearly 1.7 billion manat.
Income of banks amounted to 2.41 billion manat in January-October 2017. The banks’ expenditure amounted to 1.53 billion manat.
The operating profit of banks amounted to 880.9 million manat, while the expenditure on creation of reserves to pay off possible losses amounted to 309.6 million manat. Other expenses of the bank reached 3.4 million manat. The profit tax amounted to 25.1 million manat.
There are 31 banks, including two state-owned ones, in Azerbaijan.
Payment card market
The turnover of payment card transactions carried out via ATMs and POS-terminals amounted to 1.28 billion manat in Azerbaijan in October 2017, which is by 19.6 percent more than in October 2016, said the CBA report.
According to the report, the total number of payment card transactions reached 8.69 million in October 2017, increasing by 22.2 percent for the year.
The number of debit card transactions reached 7.81 million totaling 1.15 billion manat during the reporting period. Meanwhile, 5.21 million debit card transactions worth 949 million manat were carried out via ATMs, and 675,000 transactions worth 102 million manat via POS-terminals.
The number of payment cards rose by 6.8 percent up to 5.69 million in October 2017 as compared to the same period of 2016.
As of November 1, 2017, 2,491 ATMs operated in the country, 1,356 of which are located in Baku and 1,135 – in other cities and districts of the country. The total number of ATMs has increased by 49 units or 2 percent for the year.
As of late October 2017, the number of POS-terminals amounted to 66,336 units in the country, 38,025 of which are installed in Baku and 28,331 units in other cities and districts of the country. The number of POS-terminals has decreased by 1,816 units or 2.7 percent in Azerbaijan for the year.
Stock market
Azerbaijan’s National Depository Center CJSC has registered 1,973 stock exchange transactions for the purchase and sale of securities worth 644.5 million manat in January-October 2017 that is 3.4 times more than in the same period of 2016, says the statistical data posted on the Center’s website Nov. 17.
According to the data, 344 off-exchange transactions worth almost 737.86 million manat were registered in January-October 2017 (3.1 times more during the year).
Meanwhile, 812 transactions worth 5.32 billion manat were registered on additional emission in the period. The volume of such transactions has increased by 11.5 percent, as compared to January-October 2016.
Volume of transactions in January-October 2017:
|
Concluded agreements |
Exchange transaction, number |
Exchange transaction, in manat |
Off-exchange transactions, number |
Off-exchange transactions, in manat |
Transactions on additional emission, number |
Transactions on additional emission, volume |
|
|
January |
2 |
183 |
17,879,720 |
13 |
641,720 |
9 |
648,562,500 |
|
Fbruary |
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 |
|
October |
4 |
175 |
75,489,499 |
31 |
11,995,780 |
126 |
1,023,470,000 |