Monetary sector

Major tendencies in different segments of monetary-credit system in October 2006:

вЂў Money mass Рњ2 grow

вЂў The banks of Azerbaijan increased crediting in economy;

вЂў Deposit base of the Azerbaijani banks grew;

вЂў Trading sessions on placement of T-bills were held in the stock market. The NBA continued the placement of short-term notes in the Baku Stock Exchange.

In November 2006 the International Bank of Azerbaijan became a leader at the Baku Interbank Currency Exchange. The IBA was a leader at the exchange currency market of Azerbaijan in 2003 (December, November, September, July, August) and 2004 (except October), in 2005 excluding December, and in January to July 2006 (except April and May).

Amount of currency trading sessions at BBVB in November 2006

	Amount, in mln USD	Rise in November 2006
In total, (BEST)	$169,025	РЅР° (-) 7,18%

Without consideration of the deals at the NBA, 45.35% of the currency turnover in November fell on IBA. Along with the IBA, the top five included Bank Standard (18.08%), Bank of Baku (11.51%), AGBank (6.98%) and UniBank (6.25%).

As a result of October they were the International Bank of Azerbaijan (38.5%), UniBank (10.87%), Bank of Baku (7.05%), Azerigasbank (5.71%) and KochBank Azerbaijan (3.4%).

Bank	Share in total, %
IBA	45.35%
Bank Standard	18.08%
Bank of Baku	11.51%
Azerigasbank	6.98%
Unibank	6.25%

*Data do not include deals of the National Bank of Azerbaijan

In November some 20 member-banks of the currency section participated in the auctions. They concluded 107 deals at 40 trading sessions with the total amount of 147,508mln manats. Deals with USD instrument made up 147,474mln AZN or $169,022mln.

Deals at current section dropped 7.18%. As a result of 11 months of 2006 the turnover of currency section at BBVB made up 1,303,566 manats or 1,468bln in USD. As compared to 2005 the turnover of currency section rose 325.6mln manats or 33.3%.

The exchange rate of the national currency rose 0.07%. The rate of US dollar dropped from 0,8722 manats to 0.8716 manats per 1 USD. In the end, the average sustained rate of AZM in regard to USD made up 0,8725 manats per 1 USD in November, whereas as of October it was it was 0,8734 AZN. In general, over the past year the exchange rate grew 5.07% in respect to manat.

Monetary market

In January to November 2006 the amount of money mass in Azerbaijan rose 1074.4mln manats or 228.68%, including 9.07% in November.

In this period money mass (M2) made up 1715.5mln manats, against 1715.5bln manats of 1 November and 796.7m manats as of 1 January 2005. Without consideration of seasonal factors rise of M2 comprised 2.5 times since the beginning of 2006 and as of 2.4% October 2005.

In this period the amount of cash money (Рњ0) rose 103.6% (567.1mln manats), including 1.7% in November. As of 1 December 2006 M0 turned out at 1114.5mln manats against 1096.3mln manats fixed as of 1 November and 547.4m manats fixed as of 1 January 2006. Without seasonal factors rise of M0 made up 2.2 times since the beginning of the year and 2.1 times in October.

As of 1 December the amount of non-cash money made up 706.6mln against 619.2mln as of 1 November and 249.3mln AZN as of beginning of the year.

NBA asserted 77%-rise in money base amid 5.4%-rise in November.

In this period the reserve money rose 682.3mln AZN, comprising 1568.1mln AZN against 885.8m AZN as of early 2006. As compared to last year, manat base rose 2.1%, or 749.3mln AZN. Without consideration of seasonal factors, net rise of money base in November was 2.3% since the beginning of the year and 2.2% as compared to November 2005.

As of 1 December 2006 money base in manat made up 1347.1mln AZN against 687.8m AZN against the beginning of the year displaying 77%-growth. As compared to last year the money mass rose 5.4%.

Parameters of the monetary market

	Amount, 01.12.06
Money mass in extensive understating (Рњ3)	3044,8
Money mass on manat (Рњ2)	1821,1
Cash in manat (Рњ0)	1114,5
Non-cash in manat	706,6

In November the amount of the net international reserves (NIR) of the National Bank of Azerbaijan reduced 18.12%, while since the beginning of the year it has grown 59.2%.

Rise in October equaled 94.4%.

As of 1 December 2006 NIR comprised 1649.3mln manats against 2014.1m manats as of 1 November and 1035.9bn manats as of 1 January 2006. Net internal asserts constituted 1576.4m manats against 1882.3mln manats as of 1 November and 930.76bn manats as of 1 January 2005, the NIR of commercial banks made up 84.4m AZN against 131.8mln AZN and 105.9m AZN respectively

As of 1 December the NBA has 11,767,4mln AZN in aggregated international assets amid 121.3mln manats in international obligations, while commercial banks вЂ" 371.8mln and 280.3mln manats respectively.

Net internal assets constituted 1998.8mln AZN against 2287.5mln AZN as of 1 November and 805.9m AZN as of 1 January 2006. The expanded money mass (M3) as of 1 December was 3044.8m AZN against 2955.3mln AZN as of 1 November and 1841.8m as of 1 January 2006.

Credit Market

In January to November the banks raised 3342mln manats, 1038mln AZN in national currency and 1204.1mln in hard currency) against 2159.9mln (including 977.4mln manats in national currency and 1182.5mln AZN in hard currency) as 1 November and 1441mln AZN as of 1 January 2006. Overdue credits and loans comprised 80.2m manats against 78.8m manats as of 1 November and 68.2m as of 1 January 2006. The statistics of overdue credits does not include the similar loans allotted by non-bank credit organization Agrarkredit

The short-term credits comprised 1118.3mln manats (including 55.6mln manats of overdue loans) against 1093.1mln manats (including 54.2mln manats of overdue loan) as of 1 November and 913.3m manats (48.3mln manats) as of 1 January 2005. As 1 December. The long-term credits constituted 1123.7mln manats (24.7mln manats) against 1066mln manats (24.6mln manats) as of 1 November and 527.7mln manats (19.6m manats) as of 1 January 2005.

In this period the Azerbaijani banks increased crediting economy by 45.4%. As of 1 December the banking crediting in economy has expanded by $1012,839mln as compared to a figure fixed on 1 December 2005.

In January to November 2006 the banks allocated credits of 2971.7mln manats. Net rise in crediting economy made up 843.5mln AZN, while the credit portfolio rose 1,358,5mln as of 1 December 2005 to 2,242mln AZN (+65%). New short-term credits were issued in the amount of 1,786,8mln AZN, long-term вЂ" 1184.9mln AZN.

As of 1 December the amount of short-term credits made up 1,118,3mln AZN, while long-term credits amounted to 1,123,7mln AZN.

Over the first 11 months the country's banks issued credit in the amount of 2.8mln AZN for the period of over 10 years, which is linked with the mortgage crediting and 26.1mln AZN for the term of from 5 to 10 years.

In January to November 2005 new short-term credits were issued in the amount of 2,044,5mln AZN, including short-term credits for 1337.1mln AZN and long-term credits вЂ" 707.3mln AZN.

Two public banks allocated credits of 1000.4mln manats, private banks вЂ" 1177mln manats (+6.7% in October and +65.44% over 10 months).

As of 1 December 2006 credit portfolio of banks with foreign capital made up 519.9mln manats against 486mln AZN as of 1 November, including an 50mln AZN loan (as of 1 November вЂ" 45.3mln AZN) allocated by fully foreign banks.

Over 11 months of 2006 all 44 commercial banks in Azerbaijan provided only guarantees by $12,599 mln.

As of 1 December average annual rate of banking crediting in the economy comprised 16.32%

in national currency against 16.45% as of 1 November and 15.14% as of 1 January 2005. With consideration of inflation rate of 8% in first 11 months of 2006, real credit rate made up 8.32%. The average annual rate on banking crediting the economy made up 16.98% in foreign currency against 17.11% as of 1 November and 17.11% as of 1 January 2005.

As of 1 December the average annual rate of banking crediting of legal entities made up 14.75% in national currency against 15.06% as of 1 November and 14.36% as of 1 January 2005, while real rate was 6.75%. The average annual rate of banking credit of legal entities constituted 14.87% in foreign currency against 14.76% as of 1 November and 15.37% as of 1 January 2005

As of 1 december the average annual rate of banking crediting of physical entities made up 19.58% in national currency against 19.55% as of 1 November and 17.36% as of 1 January 2005, while real rate was 11.58%. The average annual rate of banking credit of legal entities constituted 21.40% in foreign currency against 21.29% as of 1 November and 21.31% as of 1 January 2006.

Banking sector

In Novmeber the deposit base of Azerbaijani banks remained unchanged, while in January to October its growth has made up 43.6%.

As of 1 December the total amount of bank deposits and savings of legal and physical entities made up 1859.1mln manats against 1859.1mln manats as of 1 November and 1294.4m manats as of 1 January 2006. 706.6mln manats of the total sum fell on manat reserves, while the rest - on hard currency.

As of 1 December the amount of savings and deposits of physical entities at banks comprised 626.2mln manats against 704.9mln AZN as of 1 November and 494.5m manats as of 1 January 2005. As of 1 December the amount of deposits of legal entities made up 1204.1m manats against 1154.6mln manats as of 1 October and 793.5m manats as of 1 January 2006.

As of 1 December 188.1mln manats of savings and deposits of physical entities was implemented in national currency, while 438.1mln manats in hard currency. 518.5mln manats of deposits of legal entities were implemented in manats.

As of 1 November 2006 the average rate of bank deposits in the national currency comprised 10.47% against 10.46% as of 1 November and 8.92% as of 1 January 2006. The real deposit rate made up 2.47% amid real inflation ratio of 8%. The average rate of banking deposit in hard currency was 11.34% against 11.3% as of 1 October and 10.19% as of 1 January 2006

As of 1 December the average rate of bank deposits of legal entities in the national currency comprised 8.22% against 8.28% as of 1 November and 7.41% as of 1 January 2006 while real rate was 0.22%. The average rate of banking deposit of corporate client in hard currency is 6.74% against 6,793% as of 1 Novmeber 2006 and 6.83% as of 1 January 2006.

As of 1 December the average rate of bank deposits of physical entities in the national currency comprised 12.08% against 12.09% as of 1 November and 10.7% as of 1 January 2006, while real rate was 4.08%. The average rate of banking deposit of individual client in hard currency is 11.57% against 11.57% as of 1 November and 10.71% as of 1 January 2006.

As of 1 October some 138 credit organizations held a license for banking activities, including

94 non-bank credit organizations (76 credit unions and 17 credit organizations, financed by the international humanitarian organizations) and 44 banks

The number of bank branches made up 408, including 125 branches of public banks, 283 commercial banks. The number of banks holding local branches is 40. There are also 60 bank units in the country.

The National Bank announced that on 1 November 2006 the capital of the banking system exceeded $612.06mln at exchange rate of 0,8723 AZN/USD.

In January to December 2006 the capital of banks made up rose 29.5% as compared to the beginning of the year and made up 502.8mln manats, or 46.4% as compared to 2005.

As of 1 December banks' capital made up 533.9mln new manats (AZN) against 525.6mln AZN as of 1 November and 388.26mln AZN as of begin of the year.

Stock market

In November 2006 the Ministry of Finances held 4 auctions on placement of T-bills were held at the secondary market in the amount of 23mln manats, of which 19,594mln manats, or (85.2% of entire issue) was placed. The average sustainable profitability on the results of shareholders was equal to 9.56% per annum. No deal with T-bills was held at the secondary market.

The National Bank held 5 trading sessions on the placement of T-bills. The emitter succeeded to place 94,054 manats (89.6% of the entire emission) of the total emission of 105m manats issued during 4 auctions. The average sustained profitability ratio on the results of auctions 14.96% per annum. In November 7 deals worth 13,208,554 AZN were held at the secondary market.

In November 2,599 manats was placed at the corporate shares market, while at the secondary market on short-term notes the placement amounted to 1,799mln manats. Initial placement of corporate bonds on 3 deals comprised 6mln manats, while at the secondary market it was fixed at $5,170. The deals with currency amounted to $4,015, while with manats 49,988 manats.

	Amount, 01.12.06
Money mass in extensive understating (Рњ3)	3044,8
Money mass on manat (Рњ2)	1821,1
Cash in manat (Рњ0)	1114,5
Non-cash in manat	706,6