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ROA reaches 1% in Azerbaijanâ€™s banking system

08 June 2011 13:08 (UTC +04:00)

According to review, the banks have earned AZN 38.3 mln pre-tax profits during the same period. This index remained unchanged. Net profit made AZN 37.6 mln, up 9% from year earlier.

Although the credit interests decreased and share of credits in assets declined, the interest income on bankâ€™s loan rose 8.5% to AZN 238.4 mln in comparison to a year ago. Interest income/assets ratio dropped from 7.5% to 7.3%.

On one hand increase of populationâ€™s deposits (8.6%), on the other hand decline of loans have created liquidity and reduced the profitableness in banks. Totally, interest incomes made AZN 259 mln (4.3% growth compared with previous year). The income from other operations (interbanks requirements, securities and financial leasing) dropped 28% and made 0.6% in comparison to assets. YTM on securities decreased from 7.9% to 3.9% and this is related to increase of government securities among them.

Non-interest incomes of banks exceeded the last yearâ€™s level by 8.2% and reached AZN 65.7 mln.

At the same time, banksâ€™ net income from operations in foreign currency made AZN 17.7 mln, down 14.1% from year ago. These incomes/assets ratio slipped from 0.7% to 0.5%. This is related to regulation of currency position by banks.

Total incomes of banks (interest and non-interest) made AZN 324.9 mln, up 5% or AZN 15.6 mln from previous year.

Banksâ€™ interest expenditures rose 5.8% to AZN 140.2 mln. This is mainly related to increase of individualsâ€™ deposits. Their ratio to assets decreased from 4.5% to 4.3%. Non-interest expenditures rose 23.1% to AZN 121.3 mln, compared to a year ago. This was caused by increase of other operation expenditures. Thus, banksâ€™ total expenditures (interest and non-interest) soared 13.2% or AZN 30.5 mln to AZN 261.5 mln.

Banksâ€™ net operation profit stood at AZN 63.4 mln, down 19%. Ratio of allocations for formation of reserves to assets slashed from 1.3% to 0.8%.

As a result of these, according to results of the first quarter, the ROA made 1.1%, ROE â€“ 8.7%.