BAKU

Azerbaijan’s banking sector continues to show signs of recovery as the economy rebounds from the global shock of the COVID-19 pandemic, though it still reported lower profits than a year earlier.

Lenders reported a fall in total net profit of 1.4 percent year-on-year of 505.6 million manats ($297.4 million) in the period from January to September 2021, but an increase from the 455.2 million manats reported a month earlier, according to the central bank data.

The central bank said that the operating profit of the banking sector rose by 9.8 percent year-on-year to 723.8 million manats in the first nine months of 2021. Total assets rose by 7.7 percent to 34.5 billion manats, while total liabilities increased by 8.4 percent to 24.7 billion manats.

Azerbaijan’s economy, traditionally reliant on oil and gas, was hit hard by the COVID-19 pandemic, as lower demand for oil and problems with curbing supply hurt global oil prices. Restrictions to curb the spread of the virus also impacted domestic consumption and spending as the economy shrank.

Now restrictions have been eased, the economy is rebounding, prompting Azerbaijan’s government to raise its economic growth forecast for this year, backed by recovering oil prices on world markets and growth in the ex-Soviet country’s non-oil sector.

Gross domestic product (GDP) is now projected to grow 4.6 percent and amount to 82.3 billion manats, up from a previous projection of 3.4 percent.

In January-September, GDP grew 4.8 percent year-on-year mainly backed by the growth in the non-oil sector. The rise in the oil sector was 1.4 percent, while the non-oil sector grew by 6.2 percent. In nominal terms GDP reached 62.877 billion manats.

The loan portfolio of banks rose by 9.8 percent year-on-year to 15,5 billion manats as of October 1, 2021, the central bank said. Total capitalisation rose by 3.7 percent to 4.9 billion manats. The deposit portfolio increased by 14.1 percent to 23.7 billion manats, including deposits by individuals, which rose by 7.7 percent to 8.7 billion manats.

There are 26 banks in Azerbaijan, including 12 with foreign capital. The largest bank by assets, the state-owned International Bank of Azerbaijan, reported a 25 percent rise in its net profit year-on-year to 148.2 million manats in the first half of 2021.