TODAY.AZ / Business

Azerbaijani banking system sees positive trends

19 August 2013 [15:09] - TODAY.AZ

Source: /AzerNews/

Azerbaijan's economy and banking system maintained the attractiveness for foreign investors in the first half of 2013.

In a report on financial stability in January-June, the Central Bank of Azerbaijan (CBA) said that the funds attracted from non-resident banks and international financial institutions rose by 16.2 percent to over 2.686 billion manats by the late second quarter of 2013.

"The specific share of the funds attracted from abroad in total liabilities is below the historical high, as the figure was 17.5 percent at the end of the first half of 2013. The historical maximum was recorded in January to September 2012 at the level of 17.9 percent," the CBA report reads.

Overall, the growth of the resource base of the Azerbaijani banking system in the first half of 2013 was ensured mainly by leveraging internal funds.

In this period, liabilities of the banks grew by 1.6 percent (241.1 million manats) and amounted to 15.329 billion manats as of July 1. The total volume of funds attracted by the banks in the domestic market grew by 6.6 percent, reaching 11.400 billion manats, which makes up 74.4 percent of the banks' liabilities.

The population's deposits in the country's banking system grew 15.8 percent to 5.922 billion manats, and their share in the total volume of the banks' liabilities was 38.6 percent.

The CBA also notes positive changes in the structure of deposits on terms. Time deposits increased by 1.249 billion manats, while call deposits by 302 million manats. The share of time deposits in the total volume of deposits remained at 80 percent.

The increasing public confidence in the domestic banking system paved the way for the growth of the portfolio of deposits invested for the long term and those held in the national currency.

In the first half of 2013, long-term deposits increased by 26.7 percent up to 42.4 percent of the total deposits. Deposits in the national currency over the past year increased by 21 percent, reaching over 3.583 billion manats, which accounted for 60.5 percent of the total deposits. The figure was 58 percent in early 2013.

The CBA also said that the depth of the banking sector continued to grow in the first half of 2013.

The ratio of bank assets to the country's GDP over the past five years has increased by 40 percentage points to 67 percent.

Earlier, CBA Chairman Elman Rustamov said that the central bank expects this figure to hit 100 percent in the next 10 years.

By the end of the first half of 2013, the assets of the banking sector reached 18.19 billion manats, increasing by 1.66 billion manats or 10 percent.

The volume of loans which account for 74 percent of the bank assets increased since the beginning of the year by 12.5 percent to 13.42 billion manats.

Despite a 1.9 percent decrease in the amount of funds attracted from the financial and other sectors, the contributions of private individuals increased by 15.8 percent to 5.92 billion manats.

The CBA also reported that the banking system sees a reduction in the level of concentration.
According to the report, the share of large banks (included in the top five banks in terms of capital) in the banking system's total assets decreased from 57.8 percent at the beginning of the year to 52.1 percent as of July 1, 2013, while the share of investments in credit to the economy -- from 54.2 to 51.6 percent.

The report cites keeping the trend of the declining Herfindahl-Hirschman Index, which began in 2008-2009. The index, which assesses the degree of concentration of the banking market, is average.

The capital base of the banking system continued to strengthen and the indicators of capital adequacy of the banking system were at an acceptable level.

The total capital of the banks increased by 11.7 percent (or 301.2 million manats) and amounted to over 2.883 billion manats. The main source of growth in total capital was ??capital stock, the share of which amounted to 79.5 percent (the figure was 81.6 percent in the beginning of the year).

The authorized capital of the banking system increased by 8.1 percent (or 171.4 million manats).
Investment in shares (equity) and intangible assets of subsidiaries and other credit institutions amounted to 330.2 million manats (the figure was 302.6 million manats in the beginning of the year).

The expansion of the regional network of the financial and banking system of Azerbaijan continued, according to the CBA report.

In the mentioned period, the number of bank branches in the country increased by 26 to 676, while that of bank divisions - by two to 134.

As of July 1, 43 banks operated in Azerbaijan.

In July, Moody's Investors Service kept the outlook on Azerbaijan's banking system as stable. The key drivers of the outlook included a favorable operating environment, improving asset quality and sufficient capital buffers to absorb losses.

URL: http://www.today.az/news/business/125501.html

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