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Banks: “The State Is Stable Hard”...
Markets Review 


2017 May 10 ( Wednesday )  12:03:13
Print version
Русский Azərbaycan

Baku / 10.05.17 / Turan: The main financial regulator recently released another report on the dynamics of deposits in credit organizations of Azerbaijan. According to the CBA document, the volume of household deposits in banks as of April 1, 2017 amounted to 6 billion 911.4 million manats, of which 1 billion 480.5 million manats (21.42%) was placed in national currency, and 5 billion 431 million manats (78.58%) was in foreign currency. Bank deposits of the population by the same period of last year decreased by 977.5 million manats or 12.4%.

As for the structure of these deposits, in comparison with the indicator for the corresponding last year's period, the volume of deposits in manats decreased by 31.1 million manats or 2.06%, and in foreign currency - by 946.3 million manats or 14.74%. At the beginning of this year, deposits in manats accounted for 24.7%, in foreign currency - 75.3% of the total volume of banks' deposit base. And in January of last year, due to the national currency, 18.4% were formed, while foreign currency constituted 81.6% of the banks' deposit base.

The Central Bank of the country since last year has persistently applied the anti-dollarization tactics by introducing high interest rates for manat deposits (12-15% per annum). But for deposits in foreign currency, this figure does not exceed 3%. Despite these efforts, the situation in the confidence of banks and the national currency has not yet been reversed. The volume of dollar deposits is more than three times higher than manat savings!

As the expert of the Center for Support to Economic Initiatives Samir Aliyev said, the prevalence of deposits in foreign currency is directly related to the devaluation processes in the economy. The banking sphere of the country has been dealt a crushing blow from which it still cannot recover, despite the efforts of the government. While on January 1, 2016 in the banking sector 9.474 billion manats of deposits were registered, then in early 2017 this amount was reduced to 7 billion 311 million manats. The negative trend with capital outflow will continue.

Other facts also speak about the dramatic situation in this sector. According to CBA, the credit investments of banks in the domestic economy as of April 1 of this year amounted to 15 billion 78.9 million manats. Compared with the same indicator for the corresponding last year's period, banks' credit investments in the economy decreased by 4 billion 12.6 million manats or 21%. At the same time, in March of this year, banks' credit investments decreased by AZN 345.3 million or by 2.24%.

According to the expert, banks lose the opportunity to make loans, and in fact lending is the main source of income for the bank. As a result, banks are forced to seek a way out of the situation - they close their branches or cut staff, and some others are forced to leave, declaring themselves bankrupt.

This year does not promise anything good in terms of improving the banking system, predicts the chairman of the Center for Sustainable Development Studies Nariman Agayev. According to him, the announced plans of the Financial Markets Supervisory Authority (FIMSA) for the further closure of inefficient banks increase the alarm among the population. Anxiety is growing amid information on the reorganization and merger of Ata Bank and Caspian Development Bank (CDB), as well as rumors about the closure of Access Bank in recent days. Although the latter a statement was made about the unreasonableness of these rumors, but the townspeople, taught by bitter experience with CJSC Bank Standard, no longer believe in these words. Consequently, it is impossible to exclude a massive outflow of deposits from the said credit institution.

The issue of problem loans remains unsolved. As of March 1, 2017, the total volume of these loans amounted to 1 billion 556.4 million manats. According to CBA, if in a month-long comparison the volume of problem loans decreased by AZN 76.7 million or 4.7%, on an annualized basis it increased by 226.9 million manats or 17.07%.

Thus, in the banking sphere "the state is stable hard," using a medical term. As Agayev emphasizes, the situation will change only when stability and development come into the economic sphere of the country. Given the monopoly and the oligarchy, this bright day will not come soon. -0-