BAKU

Banks in Azerbaijan reported a rise in total net profit of 24.7 percent year-on-year to 194.7 million manats ($115 million) in January-April 2021, reflecting signs its economy is starting to recover  from the global shock of the COVID-19 pandemic.

The Central Bank said that the operating profit of the banking sector rose by 7.1 percent year-on-year to 301.6 million manats in the first four months of 2021. Total assets rose by 2.3 percent to 32.797 billion manats, while total liabilities increased by 2.6 percent to 28.066 billion manats. The banks’ liabilities to the Central Bank declined by 0.8 percent to 371.3 million manats.

The banks’ loan portfolio rose by 3.2 percent year-on-year to 14.612 billion manats as of May 1, 2021.

Total capitalisation rose by 0.7 percent to 731.1 million manats.

The deposit portfolio increased by 3.1 percent to 21.362 billion manats, including deposits by individuals, which rose by 2.2 percent to 8.220 billion manats. Deposits by legal entities increased by 3.6 percent to 13.142 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 (IBA), reported a drop in its net profit of 17 percent year-on-year to 36.752 million in 2020, according to its  annual report.

The bank’s operating profit rose by 49.7 percent to 10.528 million manats.

It said that income taxes paid by the bank decreased by 6.8 percent to 63.944 million manats.

Established in 1992, IBA, said in 2019 that it had completed its recovery, paving a way for its planned privatisation.

In 2015, the country’s President Ilham Aliyev ordered IBA’s privatisation following a clean-up operation to get rid of distressed assets resulting from poor management. The bank’s former head, Jakhangir Hajiyev, was arrested on suspicion of fraud and misappropriation of public funds.

Aliyev has been very vocal about the need to end large-scale corruption in Azerbaijan, a promise he has enacted through a systematic wide-scale crackdown on graft, with continuing arrests of high level or former officials suspected of financial wrongdoing.

Oil-rich Azerbaijan has for years scored low marks on indexes involving corruption, and some government officials say that the need for a house cleaning has been evident for some time, partially in order to improve its image among would-be foreign investors, especially in the non-oil and gas export sector.

The finance ministry said that about $3 billion could have been misappropriated by Hajiyev, who denied the charges. He was convicted of fraud and embezzlement in 2016 and sentenced to 15 years in jail.

In 2017, IBA proposed a plan to restructure $3.3 billion of its debt and later received approval from creditors holding 93.9 percent of the affected debt.

The restructuring process has been completed with the support of the government, which holds more than 99 percent.

The European Bank for Reconstruction and Development (EBRD)  said in 2019 it might be interested in buying a stake in IBA, but the privatisation plans have been postponed several times and it’s not yet clear when the bank will be ready for sale.