Azerbaijan’s banks’ total loss exceeded total profit first time in the last decade

Azerbaijan’s banks’ total loss exceeded total profit first time in the last decade

Azerbaijan’s banks’ total loss exceeded total profit in 2014, the first time in the last decade. Central Bank of Azerbaijan Republic has reported that banks’ loss reached 373.66 million manat ($ 479.05 million US) last year since total lost was only 171.31 million manat ($ 219.6 million US) in 2013. The total profit of the banks were 370.54 million manat ($ 475.05 million US) in 2014. Central Bank’s official data confirms that banks’ total losses were higher than their profits in 2014. CESD researchers underlines that the reason why Azerbaijan’s banks’ total loss exceeded total profit in 2014, the first time in the last decade is related to side effects of low oil price in the world market. Demand to banks’ loans has been dramatically decreased since September, 2014 and depositors has started withdrawing their manat deposits from local banks due to potential risks and concerns of local currency devaluation.

Meanwhile, Central Bank has reported net inflow of deposits in domestic banks dropped by 21.1% year-on-year in 2014. According to the Central Bank of Azerbaijan, attraction of cash deposits of individuals and legal entities by banks for 2014 was 1.55 billion manat that was by 13.18% less against the 2013 same term index (1.769 billion manat). At the same time, payments on deposits made up 1.04 billion manat that was by 11.51% less than for 2013 (1.117 billion manat).

As a result, last year a net increase in deposits of individuals and legal entities amounted to 513.759 million manat versus 651.356 million maant a year earlier. For comparison, as of 1 January 2015 the total deposit portfolio of the banks was 15.45 billion manat, including retail deposits for 7.188 billion manat.
© CESD, 2015

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