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Low ROE ratio related to low profitability in banking in Azerbaijan

27 September 2008 14:18 (UTC +04:00)

Baku. Vahab Rzayev â€“ APA-Economics. Return on Equity (ROE) ratio remained steady for Azerbaijan-based banks during this year.
The National Bank of Azerbaijan said Azeri banksâ€™ total profits made AZN 60.93 million and total capital AZN 841.67 million in mid-2007 while the figures reached AZN 100.47 million and AZN 1 393 million at the end of the first half of 2008.
As at July 1, 2007 and 2008, the ROE ratio stood at 7.2%.
ROE reach 11.8% at the end of 2007.
ROE measures a bankâ€™s efficiency at generating profits from every manat (national currency) of net assets (assets minus liabilities), and shows how well a company uses investment funds to generate earnings growth.
According to the figures, every manat of the banksâ€™ capitals generated AZN 0.72 in the first half of 2008.
This is associated with low profitability which is caused by high expenditures.