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December has summed up 2008 year rich on events. This year was characterized by distribution of world financial crisis from the USA on developed and developing countries. Crisis of highly brave mortgage credits (subprime) in 2007, i.e. mortgage crediting of persons with low incomes and bad credit history was the direct predecessor of the general financial and bank crisis in the USA. Owing to 20%-s' falling of the prices for the real estate the American owners of habitation have grown poor almost on 5 billion dollars. Wide use from the beginning of 1990th years of derivative financial tools, derivatives and aspiration to raise profitableness at the expense of increase in risks, according to a rank of experts became the essential factor of occurrence of credit crisis in the USA. In 2000 years the boom of consumption accompanied by a steady rise in prices for raw materials was observed. But in 2008 of the price of many goods, especially oil and a food products, have reached such level that began to cause the notable economic damage menacing by stagflation and cancellation of globalization. On July, 11th, 2008 the price of oil of mark WTI has reached record price for all history of 147,27 US dollars for barrel then black oil has fallen in price more, than in 3 times. Food and fuel crises were discussed in July at 34 summit of the G8. Mortgage crisis in the USA has provoked crisis of liquidity of world banks in September of 2008: banks have stopped delivery of credits, in particular credits for purchase of cars. As consequence, sales volumes of motorcar giants have started to be reduced. High prices for oil and gasoline also operated on reduction of cars demand. In August of 2008 sale of cars in Europe were reduced on 16%, in the USA in September sale of cars have decreased on 26%, in Japan - on 5,3%. Three motorcar giants - Opel, Daimler and Ford have informed in October n reduction of volumes of output in Germany. It has led to reduction of metal production and reduction of workplaces in car industry and allied industries. From sphere of the real estate crisis was threw on real economy, recession, slump in production has begun. Considerable deterioration of a situation in world financial sector has undermined work of many companies. Retailers, networks of restaurants, factories, automobile dealers and wholesale dealers also have been compelled to suspend activity owing to restrictions in access to the capital that as a result has led to unemployment growth. The collapse of 2007-2008 has mentioned all countries and has been caused by events outside of the stock market - by boom, and then crash in credit and housing sectors, and later - also in the raw markets. The first T-bills of the western banks, and since July of 2008, when oil has started to become cheaper quickly began to fall T-bills of the raw companies of developing countries. Bank week from 6th till 10th October of 2008 has brought historically maximum falling of indexes on trading platforms of the USA. The collapse of the stock market in October of 2008 became record for the market of the USA for last 20 years, and for the market of Japan - for all history. Five leading investment banks have stopped the existence in former quality: USA Bear Stearns and Merrill Lynch have been resold, Goldman Sachs and Morgan Stanley have replaced the signboard, have ceased to be investment banks in connection with special risks and necessity to get additional support of FRS (Federal Reserves System), Lehman Brothers has gone bankrupt. Bankruptcy of the last has led to doubts in possibility of payments of the insurance companies insuring against risks of bankruptcy financed (CDS) that has led to crisis of the tool CDS and sharp increase in risks of the insurance, poured out in a credibility gap between banks and sharp growth of rates of crediting that has especially strongly affected the developing credit markets. Delay of growth of bank crediting is caused by a number of the reasons and first of all reduction of the sizes of loans for investments into a global financial system. The unwillingness to accept risks has increased in particular from outside banks and became the reason of the domino effect shown in variety of defaults and absorption of banks in the countries with developed economy. It became a principal cause of interventions from outside of the government in the increasing quantity of the countries. The countries used a wide set of tools for smoothing consequences of credit crisis, the majority of the central banks resorted to the help of monetary tools. Echoes of world crisis have reached also Azerbaijan, the economy which banking-financial system at the end of 2008 began to inspire some inconveniences and difficulties. And if from outside the Government and NBA in due time would not be taken necessary measuring, consequences of world crisis could be even more notable. According to analysts though the economy of Azerbaijan and its bank-credit system continued to show a sustainable development, nevertheless the first signals of world crisis have started to have an effect. Certainly, it was early in Azerbaijan to speak both about economic, and financial crisis. As in the conditions of reduction of foreign investments, external loans and entering of petrodollars problems, which demanded the deep analysis and acceptance of corresponding decisions, began to be shown. The condition of the financial market of Azerbaijan in many respects remains under the influence of set of global character factors. The structure of investments into a fixed capital on financing sources has to a certain extent undergone to changes. So, if following the results of 9 months of fiscal year foreign investments concerning the similar period of 2007 have decreased on 11,8% and their share has made 27,5% following the results of 2008 they have decreased on 16,3%, and their relative density - to 24,5%. Let's notice also that in total amount of investments into an economy fixed capital bank investments have made 349,1 million manat or 3,8% from their total sum with a gain by 2007 on 41,3%. Still own means of the organizations and the enterprises - 44,9% of capital inputs prevailed in investments into a fixed capital, and in 2007 the volume of means from the given source was on more than 2,2%. Record rates of increase of investments into a fixed capital continued to show budgetary funds - in 2,2 times to 3726,1 million manat or 41,1% from total amount of investments. The bank sector besides inspired restrictions in access to the external borrowings has faced requirements on the accelerated return of loans. Along with it rates of increase of contributions and as a whole depositary base have decreased. In these conditions the government has flexibly reacted and with a view of maintenance of financial sector has corrected levers of a monetary and credit and fiscal policy, simplifying requirements under obligations, giving tax privileges to banks that has provided additional liquidity in this sector of the financial market. In particular, NBA in October of 2008 has lowered a loan discount rate (refinancing percent) at first from 15 % to 12 % (on October, 14th), and then to 10% (on November, 3rd). Thus the maximum limit of a percent corridor also decreased twice - at first from 20% to 17%, and in a consequence to 15%, and the minimum limit - about 3% to 1%. Continuing a policy of maintenance of financial stability of banking system, NBA since the 1st December of 2008 - has lowered a discount rate from 10% to 8% annual and also the maximum limit of a percent corridor from 15% to 13%. Besides, with a view of maintenance of high liquidity and complex prudential regulations of stability of banking system against an external economic crisis since the 3rd November of 2008 have been entered by the decision of NBA board new norms of reservation under bank obligations, both in national currency, and in the foreign. The active norm in 12% has been lowered to 9%, and norm of obligatory reservation under external obligations - about 5% to 0. Taking these measures, NBA has provided banking system with additional liquidity at a sum of 220 million manat. Simultaneously with this Law of AP «About stimulation of increase of capitalization of banks, the insurance and reinsurance companies» is provided discharging of aforementioned financial institutions of payment of profit taxes for a period of 3 years, since the 1st January of 2009 that will allow to increase level of their capitalization. Nevertheless, following the results of 2008 the banking system of Azerbaijan has shown steady dynamical growth, either in institutional, and functional aspects. Taking steps on approach to potential clients, expanding location geography, and also a specter of rendered banking services by 45 functioning banks for expired year 82 new branches are created and their total has reached 567 with a gain to 2007 on 16,9%. Almost all territory of Azerbaijan, except 7 administrative areas grasped by the Armenian invaders, it is 20% of territory, is captured by a filial of banking network. High rates resources of banks grew. Cumulative balance actives of banking system for a year have grown on 52,8% and on the beginning of 2009 have reached 10,3 billion manat, having made 27,1% to created GDP in the country. Thus among country banks it is follow to allocate 5 leading banks, on the share of which were occurred 62,6% of all actives of banking system, 65,5% of cumulative obligations, 45,1% of the cumulative capital, 63,3% of a credit portfolio, 72,3% of deposits of legal bodies and 50% of monetary contributions of the population. About that how much effectively were actives of banks are used as a whole it is possible to judge on their structure where the greatest relative density-66,4% is occurred on credits given out to clients; 9,3% were a share of means, placed on correspondent accounts; 7,8% have been directed to investment projects. Cash money resources of bank system have made 4,5% of all actives. Apparently the greatest share in actives is occupied by credits to clients, who have shown high dynamism of a gain for a year on 53,5%. Thus participation of bank credits into real sector was defined as 18% to created GDP. The branch structure of credits is resulted in the table. Table ¹1
Apparently from the table crediting of almost branches of economy has grown in comparison with last year. Crediting of sphere of trade and services has grown on 60,1%, transport and communication - on 42,5%, the industries and manufactures - on 38,8%, agriculture and a manufacturing industry - on 32,6%. The greatest rate of increase of crediting was observed in sphere of power, the chemical industry and natural resources - in 2,8 times. Thus, the volume of crediting of the given sphere has reached 855,7 million manat or 11,9% from total amount. The volume of crediting of sphere of trade and services has made 1911,3 million manat (26,7%), transport and communication - 669,1 (9,3%), the industries and manufactures - 427,5 million manat (6,0 %), and agriculture and a manufacturing industry - 261,5 million manat (3,7%). Crediting of physical persons for a year has grown on 40,9% to 2334,9 million manat though in comparison with the end of September it was reduced to 4,1%. Crediting of construction and operations with the real estate for a year has grown on 47,7% to 461,4 million manat, however was reduced concerning the end of summer to 4,8%. The basic part of the given out credits (68%), has been given on a long-term basis. The volume of long-term credits in comparison with 2007 has grown on 60,5% to 4867,4 million manat, with a gain in last month on 2,6%. Short-term credits in December have grown on 8,6% to 2295,9 million manat that on 39,2% is more than in 2007. In currency structure small overweight aside to manat credits is observed, their relative density in total amount following the results of a year has reached 50,9%. In dynamics of volumes of crediting in manats the tendency to reduction in October-November, 2008 was observed, but owing to crediting growth in December on 2,7%, the crediting volume in manats has returned to a level of the end of the third quarter of 2008. Thus, the volume of credits given out in manats has made on 01.01.09 3649 million manat that almost on 45,2% is more than in 2007. Credits in a foreign currency, despite decrease in February and in June of 2008, showed more intensive growth than the manat credits. So, for December foreign currency credits have grown on 6,4% to 3514,2 million manat in a manat equivalent that on 62,1% is more than in 2007. In institutional structure of credits in December the share of the state banks has decreased from 43,7% to 42,3%, that corresponds to 3027,5 million manat. In comparison with last year the crediting volume of the state banks has grown on 52,1%, with a gain in last month on 1,2%. The crediting volume of the commercial banks, which share in December has raised from 53,8% to 55,3%, during the same period has increased by 7,4% to 3961 million manat, that on 54,5% is more than in 2007. Commercial banks have taken the least participation in crediting in May (52,5%) and in October (52,6%) of 2008. And October decrease in relative density of commercial banks in total crediting amount is connected with reduction of volume of crediting by these banks on 0,4% at growth of total amount of crediting for 1,4%. Banks with 100%-s' foreign capital on the end of 2008 have given out credits in total sum for 379,9 million manat, that on 75,7% more than for the same date of 2007. Rates of credits moved in the considered period in different directions. The average rate on manat credits and the rate for legal bodies in December have decreased on 0,62 and 1,01 percent points accordingly. Thus, on 01.01.09 the average rate on manat credits has made 17,45% annual that on 0,49 points above, than in December of 2007. The maximum value of the average rate has been fixed in September - 18,25 %, and minimum - in December of 2008. As to the rate on manat credits for legal bodies, it is necessary to note its decrease in comparison with December of 2007 on 0,26 percent points to 14,87% annual. The maximum and minimum value of the rate for legal bodies was observed in the same month, as in dynamics of the average rate. For physical persons credits in manats, after reduction in price from July till October, began to rise in price. So, in December the rate has risen on 0,18 points to 21,53% annual that on 1,24 percent points above, than in December of 2007. Credits in a foreign currency, after sharp decrease in rates in spring months, began slowly to rise in price. The rate on foreign currency credits of legal bodies in December has increased on 0,43 points to 12,37% annual that on 1,35 percent points more low, than in December of 2007. Apparently from the chart ¹2 the maximum value of credit rates of legal bodies, and also average rates was observed in March, and minimum - in May of 2008. In comparison with December of 2007 the average rate on foreign currency credits has fallen on 1,73 percent points to 14,52% annual, i.e. for a month the rate has risen on 0,20 points. For physical persons the rate on foreign currency credits in December has increased on 0,18 points to 21,52% annual, that concedes to an indicator for December of 2007. The world financial crisis was not reflected in dynamics of actives growth on efficiency of their use, on distortion of the actives structure of the Azerbaijan banking system. Crisis was not reflected on drawback of credits. In particular, at the end of reporting year only 1,1% of banking actives were despairing, and 1,7% have been ranked as dangerous. As a whole 4,4% of banking system actives were believed to category of non-standard actives, whereas for the beginning of 2008 year relative density of non-standard actives made 6,8%. In expired 2008 cumulative banking capital of the Azerbaijan banking system has increased on 55,3% having exceeded 1,7 billion manat. Nevertheless 16,6% of passives of the banking system was believed on the share of banking actives. Cumulative obligations of banking system for 2008 have increased on 52,2% and reached 8,6 billion manat in which almost half (47,2%) is made by deposits, but credits and deposits, received from financial sector - 38%. Monetary contributions of the population to the country banks for a year have grown 29,6%, having constituted 1903,7 mln. manat. Despite absolute growth of contributions, nevertheless we will notice, that following the results of 9 months the gain of contributions made 47,2%. We will notice, that the decrease in rates occurred in a period of global response of the savings of the population of developed and developing countries from banks. The basic part of savings of the population in banks made fixed deposits - 75,5%. And rates of a gain of urgent means in contributions (27%) conceded to rates of a gain of means on demand (38,6%). The population preferred to store the savings in national currency (54,4%). The volume of contributions in manat on the end of the year has made 1035,6 million manat that on 53,1% is more than year before and only on 1,2% more than on the end the third quarter of 2008. It speaks sharp decrease of means in population contributions in October of 2008 on 7,1%, then rates of increase of volumes of manat contributions a little weakened. Foreign currency savings of the population in banks for a year have increased by 9,6% to 868,1 million manat in a manat equivalent. Such a low rate of increase speaks that foreign currency means in population contributions to the second quarter decreased then their volume began to fluctuate that towards decrease on the contrary. Legal bodies preferred to store the basic part of the means (69,6%) on urgent deposits. Their volume on the end of the year has made 1703 million manat that in 2 times is more than on the beginning of 2008. If in first two quarters of 2008 volumes of urgent deposits fluctuated in different directions in the third quarter was observed decrease in volumes, which in the fourth quarter was replaced with growth. In deposits on demand decrease in volumes was observed from August till October of 2008. Thus, the volume of deposits on demand for a year was reduced to 15,1% to 741,8 million manat. In currency structure of deposits foreign currency means (63,2%) which volume for accounting date has made 1545,1 million manat in a manat equivalent dominated. In comparison with last year the volume of foreign currency deposits has grown almost in 2,2 times with the fact, that throughout all third quarter the volume of foreign currency means in deposits of legal bodies decreased. Manat means in deposits of legal bodies were reduced in comparison with last year by 11,1% to 899,7 million manat. We will notice also that though level of manat means in deposits of legal bodies fluctuated within a year it did not exceed 964,6 million manat. The rate under deposits in a foreign currency in December for legal bodies has raised on 0,23 percent points to 5,40% annual that on 2,28 points more low than in the corresponding period of last year. In the first and the third quarter of 2008 the rate for legal bodies decreased, and in the last quarter of the same year increase of rates was observed. For physical persons the rate on foreign currency contributions in December has fallen on 0,29 points to 12,43% annual that on 0,04 percent points more low than in December of 2007. The minimum monthly change of the rate within a year made 0,03 percent points, and maximum - 0,43. The average rate under deposits in a foreign currency was generated on 01.01.09 at level of 7,96% annual, i.e. in comparison with the last month has raised on 0,05 points, and in comparison with December, 2007 has decreased on 4,26 percent points. The maximum value of the rate was observed in the first quarter of 2008 then the rate began to fluctuate with the general tendency to decrease. The average rate on manat deposits for accounting date, having fallen for a month on 0,27 percent points, has made 11,61% annual that on a quarter of percent point more low than on 01.01.08. And, if in the second and the third quarter the rate raised, in last quarter of the expired year the average rate began to decrease. The similar trend was looked through also in dynamics of rates for legal bodies. On the end of 2008 the rate on manat deposits of legal bodies was established at level of 9,48% annual that on 0,88 points more low than at the beginning of December of the same year and on 0,20 percent points more low than at the beginning of 2008. The rate on manat contributions of physical persons in December has fallen on 0,10 percent points to 12,54% annual that on 0,07 points above than in December of 2007. The maximum level of rates on manat contributions (12,87% annual) has been noted in September of 2008 when world financial crisis began to influence in a certain measure also on economy of Azerbaijan. Were exposed to updating also rates in the interbank credit market. So, BakiBID on 90 days manat means for a month has risen on 0,67 percent points to 10,90% annual, and rate BakiBOR has risen on 0,11 percent points to 16,06%. On foreign currency means rate BakiBID for 90 days in December has made 10,27% annual that on 0,14 points above than month before, and BakiBOR has made 16,65% annual that on 0,02 points above than at the beginning of December Table ¹2
BakIBID -Baku Interbank Bid Rate BakIBOR -Baku Interbank Offer Rate BakIOUCR -Baku Interbank Often Used Credit Rate Apparently from the table ¹3 rates on credits both in national, and in a foreign currency grew faster than rates on deposits. The maximum rate on credits in national currency has been fixed in the end of the year, and on credits in dollars - in August. The maximum level of interest rate on deposits in dollars was observed in September, and on manat deposits - in October, 2008. Table ¹3
At the given level of rates in the Organized Interbank Credit Market (ÎICM) the volume of transactions for 2008 has made 144,25 million manat on manat credits, 105,06 million US dollars on dollar credits and 18,5 million euro on transactions in the unified European currency. In comparison with 2007 the volume of crediting both in manats, and in dollars has grown in 4 times. The basic part of credits in manat was given out for a period of 60 days, their relative density in total amount of crediting has made 21,5%. The second place on popularity among manat credits was occupied with 90 days credits, with share in total amount of crediting of 17,7%. On credits in dollars, 90 days credits dominated their share was occurred 33% from all volume of crediting in US dollars. 27% of credits in euro were given out for a period of 35 days, 21,6% - for 90 days, 16,2% - for 120 days. In December of reporting year the volume of transactions in manat has made 1,5 million manat that has made almost a quarter from volume of manat credits given out in November of 2008. The volume of dollar credits in December has made 5,5 million US dollars that in 9,2 times is more than last month. Under credits in euro in December, 2008 there is no transactions. THE PRESENT MATERIAL HAS EXCLUSIVELY INFORMATION PURPOSES AND IS NOT THE OFFER TO PURCHASE OR SALE OF THIS OR THAT CURRENCY. THE REVIEW IS MADE ON THE BASIS OF THE PUBLIC SOURCES RECOGNIZED AS THE RELIABLE. BBVB AND ITS EXPERTS DO NOT SUSTAIN RESPONSIBILITY FOR POSSIBLE LOSSES OF INVESTORS IN CONNECTION WITH USE OF THIS INFORMATION |
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