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Devaluation in Azerbaijan caused damage to banking sector of 1 billion AZN

Javanshir Abdullayev: It is necessary to ensure transparency for the capital market development in the country

Baku. 25 February. REPORT.AZ/ In the banking sector of Azerbaijan the level of dollar-denominated loans repayment by the customers is 70%.

Report informs, Director of the Azerbaijan Bank Training Center (ABTC) Javanshir Abdullayev said Thursday.

According to him, in the best case, loan recovery rate is 50%.

"In the banking sector of Azerbaijan margin is 4.5%. There is a misconception that the banks skinning population, receiving an 18% income on loans. People confuse the fact that the banks place funds at 12% and make loans under 30%. However, income is 18%. Due to the limited investment opportunities in the domestic market, banks can not objectively evaluate the cost of borrowed funds, for example, through bonds or other alternative instruments. Therefore, banks do not make a profit in the period of the deposit placement prior to the issuance of these funds in as loans", said the head of ABTC.

Director of the center said that 3-5% of the funds of European banks taken in hand, 30-35% - in bonds, another 30-35% - in the credits, the remaining 30-35% - in other financial instruments. In Azerbaijan, 20-25% of banks' resources taken in hand, 75-80% - in the credits.

"Currently, the dollarization of the Azerbaijani market is at the level of 80%, i.e. the Central Bank is able to provide only 20% of the money supply in circulation. In Russia, this figure is 40%. In Azerbaijan, 94% of the financial sector accounted for the banking system. It is necessary to ensure transparency for the development of capital market in the country", said Abdullayev.

Chapter ABTC explained the relative strengthening of the recent national currency decline in circulation manat masses: "At the same time, it affects the reduction in demand for imports. Most revenue Azerbaijan's banking sector was in 2014, when the banks earned 250 million AZN. However banks' losses after two devaluations amounted to 1 billion AZN."

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