Azernews.Az

The Central Bank of Azerbaijan (CBA) has started restructuring the banking sector, implementing measures to strengthen its financial stability and risk management, the bank’s Chairman Elman Rustamov said during the expanded board meeting dedicated to the results of 2015.

“Using a proactive approach to banking supervision and prudential regulation, not having allowed accumulation of additional risks in the sector, regulatory frameworks have been adapted to the new situation and countercyclical mode has been applied regarding the requirements to banks,” said Rustamov.

He said that the countercyclical approach used by the Central Bank of Azerbaijan and supporting measures made it possible to manage risks at an adequate level, and banks have shown resilience to shocks thanks to the formed capital and institutional buffer.

The assets of banks at the end of 2015 amounted to 35 billion manats, credit investments in the economy of the country - 21 billion manats, 75 percent of which fall to the share of business loans.

At the meeting it was noted that in 2015, Azerbaijan's foreign trade position was formed under the influence of the situation on the global consumer markets and trading partners.

“The decline of the current account surplus to $241 million in January-September 2015 compared to the same period of 2014 is mainly due to a decrease in oil prices,” said the message. “The consumer balance and balance of services in non-oil sector were influenced by the economic processes occurring in partner countries.”

The Central Bank of Azerbaijan, using the stabilizing possibilities of monetary policy adequately to the economic cycle, has directed its policy to ensure macroeconomic and financial stability.

“In order to create conditions for increasing investment activity of non-oil sector, lower interest rates on loans, the Central Bank of Azerbaijan has lowered the mandatory reservation requirements and parameters of the percentage corridor,” the message said.

In 2015, some 43 banks carried out activities in Azerbaijan, and their number fell to 37 in January 2016.

Rustamov also said the CBA will increase efforts to improve stability of banks against risks in conditions of volatile economic environment in 2016.

He said that in 2016, the bank will focus on stress tests, which will be carried out to preserve financial stability and effective governance in the banking sector.

“The Central Bank of Azerbaijan will continue measures that will strengthen the role of the financial and banking sector in supporting economic growth, and improve access of economic agents to loans,” he said. “The development of cashless payments, extension of the introduction of electronic payments and innovative payment technologies will be among the priorities of the bank.”

Rustamov went on to add that in 2016, the bank will be pursuing a policy that allows to increase flexibility of monetary policy, ensure financial stability of the national economy and its international competitiveness.

“Exchange rate policy in accordance with the new [floating rate] regime will aim to mitigate exchange rate fluctuations,” he said. “At the same time, it is planned to take additional measures together with the government to balance the foreign exchange market.”

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