BAKU

Azerbaijan’s banking sector returned to profit in a sign of recovery as the economy rebounds from the global shock of the COVID-19 pandemic.

Lenders reported a rise in total net profit by 4 percent year-on-year to 455.2 million manats ($267.8 million) in the period from January to August  2021 and an increase from the 408.9 million manats reported a month earlier, according to central bank data.

The central bank said that the operating profit of the banking sector rose by 11.8 percent year-on-year to 644.8 million manats in the first eight months of 2021. Total assets rose by 7.5 percent to 33.4 billion manats, while total liabilities increased by 8.5 percent to 28.6 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.

GDP grew 3.6 percent in January-August this year from a year earlier mainly backed by the growth in the non-oil sector. In January-July, the economy grew 2.7 percent.

The loan portfolio of banks rose by 6.3 percent year-on-year to 15.2 billion manats as of September 1, 2021, the central bank said. Total capital rose by 2.1 percent to 4.8 billion manats. The deposits by individuals increased by 4.7 percent to 8.6 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.