Number of Unprofitable Banks in Azerbaijan Growing

From the 37 banks operating in Azerbaijan 16 have not released a financial report on the results of 2015. Of the 21 banks that have reported, 14 completed the year with a profit, and 7 – with a loss.

Experts say that if at the end of the first quarter of this year, some banks do not hurry with the report, in all probability, they completed last year to the detriment of themselves. That is, the credit institutions do not consider it necessary to make public the situation of their financial position. For this reason, we can assume that 21 out of 37 banks finished 2015 with a loss. This situation is mainly due to the two-fold fall in the exchange rate of the manat last year.

In 2014, when the national currency was stable, only 3 of the 37 banks did not release financial reports. If we assume that two banks - Caspian Development Bank and Ziraat Bank (Azerbaijan) were not present on the market in 2014, there remain only 32 banks. Of these, only three banks ended 2014 with a loss. In other words, by the devaluation the banking sector did not experience serious problems, most of them worked at a profit.

Given the profit and loss figures, we can see that most of the banks that extended their reports in 2014 and 2015 experienced a decline in profits. For example, the profit rate in Access Bank decreased 23.7 times, AFB Bank - 1.9 times, Ata Bank – 5.5 times, Azerbaijan Senaye Banki - 2,3 times, Express Bank - 20 times, Mugan Bank – 10.7 times, Pasha Bank – 3.6 times, Rabita Bank – 1.4 times, and finally, Turan Bank - 103 times.

Several banks, on the contrary, were able to increase their profits, but their number is small. The devaluation was a success for Bank Avrasiya and the Baku branch of the National Bank of Iran. These banks increased their profits 54.9 and 9.1 times, respectively.

There are banks that completed 2014 and 2015 with a loss. In two of them there is a rate of loss. For example, the loss of Deka Bank increased 7.1 times, the loss of Gunay Bank increased 15.6 times and the loss of Para Bank decreased 7.1 times.

The banks that completed 2014 with a profit and 2015 with a loss are Azer-Turk Bank, Credo Bank and Zamin Bank. The economist Samir Aliyev said that in 2016 the number of banks operating with a loss will slightly increase. According to him, the weakening of crediting and the parallel growth of bad loans will not give the banks an opportunity to work at a profit. "The devaluation of the manat hampered the return of dollar-denominated loans. In 2016, the main problem of banks will be NPLs. The volume of such loans will grow. The continuing devaluation of the manat will increase this problem. To some extent the problem can only be solved due to support by the government. Otherwise, the banks' profits will fall sharply and they will have problems with the obligations to their depositors," said Samir Aliyev.

P.S. The Central Bank of Azerbaijan has unveiled in January 2015, ie before the first devaluation information kommercheskihbankah, rabotabschih to profit and loss. Over the last year the Central Bank has not provided any information in this regard. The press service of the structure can not possibly explain the concealment of income from the public performance and damages, claiming that sooner or later these figures will be made public. However, this uncertainty is itself an indication that the situation in the banking sector is not so good, there is a growth of unprofitable credit institutions. -0-