Azernews.Az

By Gulgiz Dadashova

The Central Bank of Azerbaijan (CBA), with deepening financial market and an expanding geographic coverage of banking infrastructure, ensures engine of economic diversification.

Today, CBA chairman of board Elman Rustamov said that over the next 10 years it is expected that the depth of the banking sector will reach 100 percent of GDP.

"Now, the depth of the banking sector is at 64 percent of GDP, and it has doubled over the past ten years. Over the next 10 years, we expect its growth to 100 percent of GDP," Rustamov said at a conference titled 'Heydar Aliyev and the financial and credit system: Achievements and Challenges' dedicated to the 90th anniversary of national leader Heydar Aliyev.

Rustamov said to achieve this goal, it is necessary to continue a process of consolidation in the banking sector.

"To this end, the CBA increased the capital requirements for banks by five times, and now the banks, owning 80 percent of the sector's assets, already meet the new requirements in terms of capitalization," he said.

The depth of the financial sector is a measure of the amount of resources mobilized and allocated by the sector and is usually measured as a share of GDP to ensure comparability with countries.

Rustamov went on to say that over the past 10 years, the banking sector has increased by 10 times.

"At present, the banks' capital adequacy is 17 percent. External liabilities account for 15 percent of total liabilities of the sector. Also, the matter of establishment of private credit bureaus and expansion of mortgage lending is under consideration currently," Rustamov said.

According to Rustamov, Azerbaijan is in the top twenty in terms of financial and macroeconomic stability in the world.

"Over the past 10 years, Azerbaijan's economy grew by 3.4 times, and the average growth rate during this period exceeded the world average by 3.5 times and amounted to 14 percent a year. The poverty rate declined by 10 times, and the country's strategic currency reserves reached $48 billion, which exceeds the external debt by eight times, " Rustamov said.

Earlier, Azerbaijani Minister of Taxes Fazil Mammadov said the strategic currency reserves of Azerbaijan have increased by 2.6 percent compared to the beginning of 2013 to $48 billion and this is sufficient to finance three-year import.

Mammadov noted that this is one of the main indexes in the world scale from the point of economic security.

As of January 1, 2013, the total assets of 43 banks operating in Azerbaijan reached $17.643 billion manat, increasing by 24.2 percent compared to the beginning of last year.

According to the CBA, the top five banks in the country have total assets of 10.462 billion manat (or 59.3 percent of total banking system assets), 61.9 percent of the total market liabilities (9.3 billion manat) and 50.2 percent of the total market capital (1, 29 billion manat).

The share of banks holding six to 15 places stands at 5.175 billion manat of assets.