Capitalization of banking sector increases by more than 10pct

By Azernews

By Sara Israfilbayova

The capitalization of the banking sector of Azerbaijan in September 2018 amounted to 4.1 billion manats ($2.41 billion), which is 10.8 percent more than the figure at the beginning of the year.

The Financial Market Supervision Authority reported that the total assets of banks since the beginning of the year increased by 20.6 percent, reaching 29.2 billion manats ($17.18 billion). In the reporting period, the volume of cash at the disposal of banks amounted to almost 1.38 billion manats ($811.76 million), the correspondent accounts at the Central Bank (CBA) contained 2.4 billion manats ($1.41 billion) and the funds on the nostro accounts (correspondent accounts with other banks) - almost 2.06 billion manats ($1.21 billion). Bank investments in securities reached 3.37 billion manats ($1.98 billion) (a 34.7 percent increase since the beginning of the year).

Since the beginning of the year, banks increased lending by five percent and by the end of September, the total loan portfolio of banks amounted to 11.9 billion manats ($7 billion). Provisions for these loans were created for 1.65 billion manats ($970.59 million).

The total liabilities of the country’s banking sector increased by 3.6 percent to 25.1 billion manats. The largest share of liabilities fell on deposits - 72.7 percent, or 18.25 billion manats ($10.73 billion) (8 percent growth since early 2018). The volume of deposits of individuals amounted to 8.1 billion manats ($4.76 billion), legal entities - 10.13 billion manats ($5.96 billion).

The liabilities of banks to the CBA decreased from 507.6 million ($298.59 million) to 409.3 million manats ($240.76 million).

The net profit of the banking sector over the first nine months amounted to 171.8 million manats ($101.06 million). Profit was formed at the expense of interest income at 1.29 billion ($758.82 million) (including 899.4 million manats ($529.06 million) - income from interest on loans) and non-interest at 393.3 million manats ($231.35 million). The interest expenses of banks amounted to 441.1 million manats ($259.47 million), including the payment of interest on deposits - 288.6 million manats ($169.76 million), non-interest - 731.4 million manats ($430.23 million).

As a result, operating income of 509.1 million manats ($299.47 million) was formed. During the reporting period, the banks also allocated 313.7 million manats ($184.53 million) to cover potential losses on assets and paid 24.8 million manats ($14.59 million) as a profit tax.

Moreover, the CBA reported that the loan portfolio of banks and non-bank credit organizations of Azerbaijan in January-September 2018 increased by 4.6 percent to 12.302 billion manats ($7.24 billion) as of September 30, 2018.

Banks with a state share issued loans in the amount of 1.86 billion manats ($1.09 billion) (a decline of 3 percent) or 15.1 percent of all loans, private banks – 10.42 billion manats ($6.13 billion) (an increase of 6.6 percent) or 81.6 percent of all loans. The rest falls to the share of non-bank credit organizations.

As many as 30 banks, including two with state participation, are implementing their activities in Azerbaijan.