Azerbaijan's banking sector monthly loses 130 million AZN - SURVEY

Baku. 25 May. REPORT.AZ/ Debt burden of the banking sector of Azerbaijan continues to increase. Thus, the actual suspension of lending by banks after the first devaluation in February 2015, as well as payment of interest on deposits significantly worsened the financial situation of banks.

Analytical Group of Report News Agency notes that the total deposit portfolio of the banking sector, including deposits of non-residents and the government, amounted to 18 519.1 million AZN as of April 1, 2016.

"On April 1, 2015, the volume of deposits in Azerbaijani manat amounted to 3 539.4 million AZN, in foreign currency - 9 852.7 million AZN. According to the report of the Central Bank of Azerbaijan (CBA), during this period the average interest rate on manat deposits amounted to 8.99% , dollar deposits - 8.75%. In view of this, on April 1, 2016, banks have paid or have to paid on manat deposits 318.2 million AZN, on dollar deposits - 1 272.6 mln AZN (at current exchange rate). This means that the banks' commitments to depositors amounted to 1 590.8 million manat", analysts say.

"Of course, the timing of payments on deposits and various one-off payment, percent problem does not arise. However, monthly payments to banks are approximately 132.5 million. AZN. Considering the operating income of banks over the last year is only enough to cover current expenses, and adding to this reduction fees due to the growing number of bad loans, further deterioration in the financial condition of banks is not excluded. In the next 12 months, resumption of lending is not expected, so the banks should look for alternative income sources. This may be a stock market, portfolio management, acquisition of shares in private companies and etc.", stressed the Report experts.

Notably, due to the absence or low interest rates on demand deposits, this category of deposits hadn't been included in the analytical survey.