BAKU, Azerbaijan, October 5. The aggregate capital of banks in Azerbaijan grew by 6.5 percent, reaching 5.5 billion manat ($3.26 billion) for the first half of 2023, Trend reports.
According to the Financial Stability Report of the Central Bank of Azerbaijan (CBA), the capital adequacy ratio of the banking sector during this period decreased by 0.8 percentage points to 18.5 percent following the increase in risk-weighted assets.
The CBA noted that the main factor contributing to the growth of the total capital was the increase in Tier 1 capital by 14.9 percent, reaching 4.71 billion manat ($2.78 billion). This growth was mainly driven by intra-bank profits and the allocation of last year's profits to undistributed retained earnings.
During the first six months of this year, one of the banks received a capital injection of 55 million manat ($32.35 million).
Despite a four-percent reduction in total assets (1.8 billion manat or $1.06 billion), the volume of risk-weighted assets grew by 11.2 percent (three billion manat or $1.76 billion), leading to a nine-percentage point increase in the ratio of risk-weighted assets to total assets.
This increase resulted from measures taken since the beginning of 2021, such as tightening prudential requirements and increasing requirements for risk-weighted assets, including operational and market risks. The majority of such assets were formed from credit risks (90 percent).
In 2022, aggregate capital of the banking sector in Azerbaijan increased by 14.8 percent (670 million manat or $394.1 million) to 5.2 billion manat ($3.06 billion), and the capital adequacy rate of the sector increased by 0.2 percentage points to 19.3 percent.
