Monetary sector (26.10- 31.10.2009)

Central Bank of Azerbaijan described the stability of Azerbaijan's banking system amid the global financial crisis through two factors - conservative politics, with building of bank indicators and the establishment of reserves for credit risks.

Currency market and rates of AZN

In September official exchange rate of the national currency in relevant to USD rose 4 points. Dollar's rate decreased from 0.8039 manat per U.S. dollar up to 0.8035 manat per dollar.

Exchange rate of USD incurred oscellation during the month, but from the beginning of month started dropping. Maximal rate was registered in the beginning of the month at 0.8040 and minimal on September 17 at 0.8032. The oscillation between the maximal and minimal rate made up 8 points

In September, the rate of euro, unlike the US dollar, increased in Azerbaijan through sharp fluctuations. The currency rose by 205 points (from 1.1540 AZN/EUR to AZN/EUR 1.1745). The monthly minimum of rate - 1.1340 EUR/AZN - took place on September, monthly maximum of rate - 1.1895 EUR/AZN on September 23. The fluctuations between maximal and minimal significance constituted 555 points

ASB Bank is at the top of five banks-leaders of exchange currency market in accordance with share of concluded deals in summary turnover of currency auctions at Baku inter-bank currency exchange in September.

Joint-stock commercial Pasha Bank, EvroBank, Bank of Baku and Unibank joined the number of leading dealers of organized currency market.

About 14 banks participated in BBVB currency auctions in September 2009. About 40 trade sessions were conducted in Exchange E-Auction System in reporting month. About 42 deals were registered. Total volume of currency auction on USD/AZN hits 46,742 million manat or $58,184 million in reporting month.

Total volume of auction in currency section increased 2.9 million manat or 6.1 percent compared to indices of August in reporting month.

Daily turnover in exchange E-system of auction on USD/AZN reached $2,909 million. Average volume of each deal hits $1,385 million.

Joint volume of auctions hits 1.547 billion manat as a result of nine months of 2009.

It should be noted that exchange rate of national currency USD/AZN_TOD ups 0.1 percent in reporting month from 0.8034 to 0.8042 per $1. Average rate of dollar to manat hit 0,8034 manat per $1 in September compared to 0,8040 manat as a result of August 2009.

Monetary market

As of 1 October 2009, the Central Bank of Azerbaijan noted the reduction in the expanded monetary base by 15.8 percent for the current year and 6.13 percent to the corresponding period of the last year, compared to growth of 44.27 percent in 2008.

The amount of reserve money as of October 1 amounted to AZN 4180.6 million compared to AZN 4,233.9 million as of 1 September, AZN 4963.9 million manat as of the beginning of 2009 and AZN 4453.4 million as of 1 October 2008.

The level of bank reserves since the beginning of the year fell by 46 percent and compared to the same period of 2008 - 51.2 percent. This is associated with a reduction in the norms of reservation.

In January-September 2009 the Central Bank of Azerbaijan noted the reduction in money supply (M2) by AZN 858.6 million or 14.12 percent with its reduction by 292.1 million manat (5.3 percent) in annual calculation.

So, as of October 1, 2009 the rate of M2 was 5,222.4 million manat compoared to AZN 5,333.5 million as of 1 September, 6.081 billion manat as of 1 January and 5514.5 million manat as of October 1, 2008.

The amount of cash money supply (M0) in September fell by 0.87 per cent (31.8 million manat), in January-September - by 12.7 percent, at an annual rate - 0.34 percent (12.2 million manat). As of October 1, 2009 the index of M0 was 3620.1 million manat compared to AZN 3,651.9 million as of 1 September, 4145.7 million manat as of January 1, 2009 and 3632.3 million manat as of October 1, 2008.

As of 1 October 2009, Broad Money Supply (M3) totaled AZN 7,458.4 million compared to AZN 7,569.1 million as at 1 September, AZN 8494.2 million as of January 1, 2009 and AZN 7649.6 million as of 1 October 2008.

In September this figure fell by 1.5 percent, in January-September by 12.2 percent and annualized decrease was 2.5 percent.

As of October 1, the transaction money (M1) amounted to AZN 4,449.2 million compared to AZN 4,550.3 million, AZN 5145 and 4619.3 million respectively. In September this figure fell by 2.2 percent, in January-September by 13.5 percent and annual decerase was 3.7 percent.

Parameters of monetary market, in mln manat

Credit market

In September 2009, Azerbaijani banks increased crediting of economy by 2 percent, 8.6 percent compared to early 2009 and 17.8 percent in annualized pace.

According to the CBA, as of Oct. 1, banks issued credits worth 7780.8 million manats (4310.2 million manats in national currency and 3470.6 million manats in hard currency) compared to 7629.8 million manats to Sept. 1 (4245.7 million manats in national currency and 3384.2 million manats in hard currency) and 7163.2 million manats (3.649 million in national and 3514.2 million in hard currency) on Jan.1, 2009 and 6604.7 million manats (3648.1 million manats and 2956.6 million manats) on Oct. 1, 2008.

As for Oct. 1, 2009 the share of loans, granted in national currency was 55.4 percent and in foreign currency - 44.6 percent.

As many as 309.4 million manats of lending out of the total portfolio are overdue as compared to 274.9 million manats on Sept. 1, 159.8 million manats on Jan.1, 2009 and 139.3 million manats on Oct. 1, 2008. Statistics of the overdue credits doesn't include analogous loans of non-bank credit organization Aqrarkredit.

Short-term credits made up 2159.1 million manats (including 181.7 million manats of overdue loans) compared to 2133.3 million manats (including 151.4 million manats of overdue loans) on Sept. 1, 2295.9 million manats (96.7 million manats of overdue loans) on Jan. 1 in 2009. Volume of short-term loans in the economy increased by 1.2 percent in September and decreased 6 percent compared to early 2009. As of Oct. 1, 2009, as many as 42.9 percent of short-term credits and 42.3 percent of overdue credits were in hard currency.

Long-term crediting made up 5621.8 million manats (including 127.7 million manats of overdue loans) as compared to 5496.6 million manats (including 123.4 million overdue loans) on Sept. 1, 4867.3 million manats (63.1 million manats) on Jan. 1, 2009. Volume of long-term loans in the economy increased by 2.3 percent in September and 15.5 percent compared to early 2009. As of Oct. 1, 2009, as many as 45.3 percent of long-term credits and 29.4 percent of overdue credits were in hard currency.

According to the CBA, as of Oct. 1, 2009, the only state bank in the country (International Bank of Azerbaijan) issued 3705.1 million manats of credits with specific weight of 47.6 percent (a 2-percent increase from September). Private banks issued credits worth 3893.7 million manats with specific weight of 50 percent (increase by 2.1 percent as of September), the rest 2.3 percent accounts for non-bank loan organizations (they issued 182 million manats).

As of 1 October, the average rate on bank lending to the economy of Azerbaijan in national currency amounted to 14.63 percent compared to 14.86 percent as of September 1, 17.45 percent as of January 1 and 18.25 percent as of October 1, 2008. Average interest rate on bank lending in hard currency amounted to 16.35 percent compared to 15.48 percent as of September 1, 14.52 percent as of January 1 and 14.70 percent as of October 1, 2008.

In early October, the average rate on bank lending to legal entities in national currency amounted to 12.15 percent compared to 12.48 percent as of 1 September, 14.87 percent as of January 1 and 16.10 percent as of October 1, 2008. The average rate on bank credits to corporate clients in hard currency was 13.88 percent compared to 12.71 percent as of 1 September, 12.37 percent as of 1 January and 11.98 percent as of 1 October 2008.

During the reporting period, the average rate on bank lending to individuals in national currency amounted to 20.57 percent compared to 20.68 percent as of 1 September, 21.53 percent as of 1 January and 21.21 percent as of 1 October 2008. Average interest rate on bank credit to the individual client in hard currency was 22.25 percent compared to 21.76 percent, 21.52 percent and 21.50 percent respectively.

Banking sector

In September 2009, deposit base of Azerbaijani banks decreased by 2.2 percent, since the beginning of the year by 11.4 percent and in annualized calculation by 5.8 percent.

As of October 1, 2009 the total amount of bank deposits and deposits of legal and physical entities amounted to AZN 4220.0 million compared to AZN 4.3146 million as of 1 September, AZN 4.7607 million as of 1 January 2009 and AZN 4479.5 million as of 1 October 2008. Of this amount, AZN 15083 million was in national currency and AZN 27116 million - for the currency.

In September the deposits of individuals increased by 4.7 percent, but the amount of deposits of legal entities declined by 8.3 percent. During January-September, individual deposits increased by 11.32 percent, but corporate client deposits declined by 26.5 percent. On an annual basis, deposits of individual customers rose by 12.23 percent, but corporate deposits rose by 22.4 percent.

As of October 1, 2009 the amount of individuals' deposits in domestic banks amounted to AZN 2120.8 million compared to AZN 2025.5 million manat as of 1 September, AZN 1905.2 million as of January 1 and AZN 1889.6 million as of October 1, 2008.

In early October, the amount of deposits of legal entities totaled AZN 2099.2 million compared to AZN 2289 million as of 1 September, AZN 2855.5 million as of 1 January, and AZN 1714.6 million as of October 1 of last year.

As of 1 October, AZN 806.1 million of deposits and deposits of individuals was carried out in the national currency, and AZN 1314.7 million in hard currency. From deposits of legal entities, AZN 702.2 million was implemented in manat and AZN 1397 million manat in hard currency.

Average rate on deposits in manat as of 1 October 2009 amounted to 11.80 percent compared to 11.61 percent as of 1 September, 11.61 percent as of January 1, 2009 and 12.31 percent as of the beginning of October 2008. Average rate on deposits in foreign currency amounted to 10.64 percent compared to 9.56 percent, 7.96 percent and 7.97 percent respectively.

As of October 1, the average rate on deposits of physical entities in manat was 13.04 percent compared to 12.92 percent as of 1 September, 12.54 percent as of the beginning of January and 12.87 percent as of the beginning of October 2008. Average rate on deposits from individual customers in foreign currencies amounted to 12.50 percent compared to 12.45 percent, 12.43 percent and 12.53 percent respectively.

As of the beginning of October, the average rate on deposits of legal entities in manat was 7.83 percent compared to 8.41 percent as of 1 September, 9.48 percent as of 1 January and 10.93 percent as of 1 October 2008. Average rate on deposits from corporate clients in foreign currency amounted to 4.79 percent compared to 4.94 percent, 5.4 percent and 5.13 percent, respectively.

The capitalization of the banking sector of Azerbaijan grew 1.7 percent in January-September 2009, and 14.5 percent compared with the beginning of the year, the Central Bank of Azerbaijan (CBA) said. The total capital of banks is 1952.3 million manat of 1 October.

According to statistics provided by the Central Bank, as of beginning of September 2009, the capital of 41 banks exceeded 10 million manat compared to 43 banks as of the beginning of the year. Accordingly, the share of this category of banks in the total capital of all banks fell from 98.6 percent to 97.7 percent.

Four banks with the special weight of 2 percent have formed their capital between 5 and 10 million manats, one bank - 3.5 and 5million manats (0.3 percent).

Stock market

The total volume of transactions for the period of January-September 2009 for all securities traded in Baku Stock Exchange was 2.9 billion manat.

The overall corporate securities market increased by 38.81 percent. Meanwhile, the secondary market of corporate bonds increased for more than 2.9 times. However the primary market of corporate bonds increased by 10.16 percent.

The highest growth rate was observed in the secondary market of equities, which jumped by 54 times. However the primary market of equities increased by 3.13 percent.

There is an increase in trading activity of primary and secondary markets of Government Bonds, for 1.5 and 3.8 times, respectively.

Comparative table on the results of trades of Corporate Securities at BSE

(January-September 2009)

Comparative table on the results of trades of Government Securities at BSE

(January-September 2009)