Finance

Finance

Commercial banksâ€™ external assets increases in Azerbaijan

04 December 2009 13:45 (UTC +04:00)

Baku. Vahab Rzayev â€“ APA-Economics. As of November 1, total foreign assets of Azerbaijan-based commercial banks stood at AZN 1 542.9 million, down 23.4% or AZN 360.7 million from a year earlier.
However, the banksâ€™ total external assets grew by 0.2% or AZN 2.5 million during January-October, and 1.3% or AZN 15.2 million in October alone, said the Central Bank of Azerbaijan.

The growth in commercial banksâ€™ total external assets has become commonplace in recent years, as the growth was 14% in 2006, 66% in 2007 and 2.3 times in 2008.

As of November 1, foreign liabilities stood at AZN 1 803.6 million as we have seen negative balance of foreign capital since 2006.

This shows that Azeri banks are still play as capital importers because of several factors including lack of adequate free funds in the bank system and the central bankâ€™s policy to limit money stock as part of inflation curbing policy.

At the same time, the wide difference of interest rates between interbank loans (15-16% per annum) in the country and loans abroad (6-7%). As a result, banks prefer to get money from abroad.