Azerbaijan records decrease in number of unprofitable banks

Total income of Azerbaijani banks (interest and non-interest income) in the first half of 2012 increased by 12.9 percent, or 86.4 million manat compared to the same period last year, amounting to 756.7 million manat, the Central Bank of Azerbaijan said.

Total interest income of Azerbaijani banks for the year increased by 12.2 percent (or 64.5 million manat), amounting to 593.7 million manat as of July 1.

Non-interest income (income from foreign currency transactions and commission income from other services) increased during the year by 15.5 percent - to 163 million manat at the end of the reporting period.

In the first six months interest income on loans granted by banks to customers rose by 12.4 percent to 546.9 million manat. The interest income to average assets ratio was 7.6 percent, or 0.1 percentage point lower compared to the same period last year.

Interest income from other operations (investment, financial leasing, interbank liabilities) during January - June increased by 10.4 percent compared to the same period last year, and compared to average assets remained stable - at 0.6 percent.

In January - June, total expenses (interest and non-interest) of banks grew by 14.7 percent (or 77.9 million manat) compared to the same period last year and amounted to 606.4 million manat.

Due to the increasing volume of term deposits in Azerbaijan interest expense for the first half increased by 12.6 percent compared to the same period in 2011, amounting to 312.5 million manat. The interest expense to average assets ratio was 4.4 percent, which is 0.1 percentage point lower than in the same period last year.

Non-interest expenses of Azerbaijani banks increased over the year by 17.2 percent to 284.9 million manat.

"The reason for this is the increase in the expenses of the banking system for wages and other compensation, used by fixed assets in banking", the report says.

The non-interest expenses to average assets ratio remained virtually unchanged (+0.1 percentage points), amounting to 3.9 per cent.

Operating profit in January-June amounted to 150.3 million manat. Return on assets (ROA) was 0.1 percent, return on equity (ROE) - 1.2 percent.

In first-half profit of the banking system amounted to 19.1 million manat, and net profit - 10.3 million manat. The number of banks that have completed the first half with a profit amounted to 35 compared to 33 in the same period last year, nine banks (compared to 11 as of July 1, 2011) completed the first half with a loss.


/Trend/