Finance

Finance

Employee efficiency ratio is 8.4 in Azerbaijanâ€™s banking system

02 February 2009 08:32 (UTC +04:00)

Baku. Vahab Rzayev â€“ APA-Economics. Interests gained on loans lent to customers accounted for AZN 871.74 million of total revenue generated in the banking sector of Azerbaijan during 2008, said the National Bank of Azerbaijan.
Of the total revenue of AZN 1 259.1 million, interest income accounted for 975.22 million, leaving AZN 283.88 million to non-interest income.
Therefore, interests gained on loans lent to customers accounted for 69.2% of total revenue and 89.4% of interest incomes.
This shows that loans play important role in performance of banks and earning assets.
Interests the banks paid on term deposits during 2008 made up AZN 229.58 million or the bulk of the costs in the banking system.
Interest expenses accounted for AZN 442.48 million and non-interest expenses AZN 357.80 million of the total banking expenditures of AZN 800.28 million.
Thus, term deposits spent 28.7% of total expenses and 51.9% of interest expenses.
At the same time, paychecks reached AZN 150 million in the banking system, indicating expensive labor force in this sector.
Effective management strategies reduce costs while simultaneously improving employee output. The very best firms keep the ratio of labor costs constant and they use technology and productivity tools to increase output.
A ratio between revenues and total employee costs, and between profit and total employee costs shows how productive or efficient the personnel are. Banks that generate more manats of profit per manat spent on employee costs are the most productive. In Azerbaijanâ€™s banking sector, per 1 manat spent on employees generated 8.4 manats of revenue or 1.6 manats of profit.