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Deposits-to-assets ratio is safe in Azerbaijan

29 June 2009 15:12 (UTC +04:00)

Baku. Vahab Rzayev - APA-Economics. As of June 1, the ratio of deposits put in the Azerbaijan-based commercial banks by population was 21%, up 1.7 percentage points from a year ago and up 2.5 percentage points from early this year, said the Central Bank of Azerbaijan.

The deposits to assets ratio is an important indicator that reflects the financial stability and solvency of banks in case of mass withdrawal of deposits. There is no single standard for this ratio because it varies for the economies but below 30-35% is believed to indicate stability.

At the same time, when calculating this indicator in terms of safety, the asset quality should be taken into account.

In this regard, we can say that currently about 3-4% of total banking assets in Azerbaijan are estimated as non-standard assets which include bad, poor, and risky assets.

Liquid assets account for 16-17%. Interestingly, loans 5% of which are overdue make up approximately 65% of assets. In this case, the risks of bank deposits can be regarded as low.