FX sales cause 3.6% decline in SOFAZ assets

Azerbaijan's loan portfolio increased by 2.9% month-on-month and by 11% year-over-year (yoy) in October, with business loans expanding by 82% mom and consumer lending falling markedly by 29% mom, Report informs, citing World Bank's "Azerbaijan Monthly Economic Update - December 2021" bulletin.

Deposits rose by 1.6% mom and by 16.4% yoy in October, with the dollarization rate stable at 51%. Bank profits improved considerably by 28% mom in October.

The manat remained stable at 1.7 AZN per USD, with a slight decrease in FX sales. State Oil Fund (SOFAZ) sold USD 540 million of its FX assets in October, slowing by 3.6% mom. CBA reserves were stable in October and edged down slightly in November but were comfortable providing 7.8 months of import cover.

As of November 1, 2021, the banking sector's assets in Azerbaijan stood at 34,963.6 million manats, up 13.95% from the previous year, said the Central Bank of Azerbaijan (CBA).

14,819.8 million manats of the banks' assets were net loans to customers. Over the past year, the sector's loan portfolio grew by 12.8%, while the share of loans in assets fell from 42.8% to 42.4%.

The banking sector's liabilities grew by 15.1% to 30,028.8 million manats, including the deposit portfolio increased by 23.8% to 24,026.1 million manats during the reporting period. Of this, 8,713.8 million manats are deposits of individuals and 15,312.3 million manats of deposits of legal entities. During the year, the population's funds in banks rose by 12.3% and companies' funds in banks by 31.5%. Deposits in foreign currency in banks as of November 1 this year amounted to 9,884.4 million manats. This is 0.8% more than on October 1, 7% less than on January 1, 2021, and 2.3% less than on November 1 last year.

In January-October 2021, the net profit of the Azerbaijan-based banks stood at 570.1 million manats, 19.3% more than a year earlier.