Refinancing rate up from 9.5% to 15.0%
Central Bank of Azerbaijan increased its key refinancing rate from 9.5% to 15.0%, effective September 14, 2016. This move marks the fourth rate hike by CBAR in 2016, from as low as 3.0% in the beginning of the year.
In its statement, CBAR announced that given the changes in domestic and foreign factors affecting inflation, it deems necessary to implement some anti-inflationary policies, of which the rate increase is one, while an increase in FX supply at auctions was another.
Tax revenues slightly above the budgeted level
According to the Ministry of Taxes, its tax revenues in 8M16 stood at AZN 4.4bn, or 100.3% of the budgeted figure. However, compared to 8M15, revenues are down 4.7% y/y. In monthly terms, revenues in August 2016 were up 8.8% y/y to AZN 0.5bn.
Banks’ foreign assets more than halved over a four-month period
After four consecutive months of decline, commercial banks’ foreign assets are down 52.1% to US$ 2.8bn as of July 2016, compared to a peak of US$ 5.9bn in March 2016. In month-to-month terms, foreign assets were down 10.1% in July. Markedly, foreign liabilities were also down 5.5% m/m to US$ 4.1bn.
Loan portfolio down 9.3% m/m in July 2016
Commercial banks’ loan portfolio was down 9.3% m/m (-17.2% y/y) in July 2016 to AZN 16.7bn, driven by a 23.0% m/m decrease in loans to construction and real estate and a 10.8% fall in loans to households (excluding mortgage loans).
Dollarization ratios broadly flat
Compared to the previous month, deposit and loan dollarization ratios were broadly flat in July 2016, with the deposit dollarization ratio at 80.0% and the loan dollarization ratio at 48.3%. Excluding deposits of non-residents and the central government, the deposit dollarization ratio was at 72.1%.
NPL ratio up to 9.0% in July 2016
Non-performing loans were down 2.3% m/m in July 2016 to AZN 1.5bn, driven by an 8.6% m/m decrease in NPL in local currency (LC) loans, whereas problematic FX loans were up 4.2% m/m. As a result, the NPL ratio in LC loans remained relatively flat at 8.2%, while in FX, the ratio was up to 9.8% in July 2016 (from 8.6% in June 2016). In aggregate terms, as total loans decreased, the NPL ratio increased further to 9.0% in July 2016.
