The Central Bank announced the statistical indicators of the banking sector of Azerbaijan for 2022. Fakt Yoxla analyzed those indicators.
According to official information, in 2022, 25 banks operating in the country made a total profit of 915 million manats.
Compared to 2021, last year the banking sector increased its profit by 306 million manats (about 50 percent). Compared to the pre-pandemic period, i.e. 2019, the increase in the profit of the banking sector is equal to 70 percent.
Incomes of the banking sector in Azerbaijan
During the past year, the level of profit concentration remained high. From the indicators disclosed by the banks in their financial reports, it is clear that 85 percent of the net profit of the banking sector is divided between the five banks that have the most profit. The share of the bank, which took the first three places in terms of profit volume, was 78 percent.
The most profitable banks in 2022
The most profitable bank in the country in 2022 was Kapital Bank, which is part of Pasha Holding. The profit of the bank during the year was 308 million manats. This means that one-third of the total profit in the banking sector, where 25 banks operate, belonged to just one bank.
Pasha Holding is represented in the banking market not only by Kapital Bank. This holding is the main shareholder of Pasha Bank, which ranks third in terms of profit. The total profit of the bank is 149 million 400 thousand manats.
Therefore, in 2022, the amount of profit obtained by Pasha Holding from the banking sector alone was 457 million manats. This means that last year half of the total profit of the country's banking sector fell on the share of one holding.
In 2022, the profit of state-owned banks was also quite high. The second most profitable bank last year was the International Bank. The profit of the bank exceeded 254 million manats.
Another state-owned bank - Azer Türk Bank also made a profit of 11 million manats at the end of 2022. Thus, last year, the total profit of state banks was 265 million manats. This means 29 percent of the total earnings of the sector.
Azer Türk Bank was the 8th most profitable bank in the country last year. Thus, in 2022, 79 percent of the profits of banks in Azerbaijan fell to Pasha Holding and state-owned banks, and the remaining 21 percent went to other 21 banks.
The family members of President Ilham Aliyev are represented among the shareholders of three of the banks occupying the first five places in terms of profit volume (Kapitak Bank, Pasha Bank, and Xalq Bank). Of the other two banks in the top five, International Bank is state-owned. The largest shareholder of the Bank of Baku is NAB Holding.
As we mentioned above, the total profit of the banking sector increased by 306 million manats in 2022. 247 million manats (81%) of these funds fell to the share of profit growth of the top five banks. Concentration in the banking sector was observed not only in the volume of profit but also in the volume of assets.
Top five banks by the volume of assets
As can be seen from the table, 74 percent of the total assets of 25 banks belong to the top five banks in terms of the volume of assets. The share of the banks occupying the first three places by the volume of assets is 65 percent.
Concentration in the banking sector is at a high level due to the funds kept in banks - the deposit portfolio. According to official indicators, 79 percent of deposits in banks belong to the top five banks in terms of the size of the deposit portfolio. The share of the first three banks in the total deposit portfolio is equal to 70 percent.
The first five banks by the size of the deposit portfolio
An increase in the total deposit portfolio of banks was recorded in 2022. At the end of 2021, the volume of deposits held by individuals in banks was equal to 9 billion 32 million manats, and at the end of 2022, this figure increased to 11 billion 483 million manats. That is, during the year, the volume of funds of the population in banks increased by 2 billion 450 million manats.
The level of dollarization of savings of natural persons decreased from 41.7 percent to 39.8 percent. The volume of funds kept by legal entities in banks showed higher growth than the deposits of individuals. During the year, the volume of funds of legal entities in banks increased from 17 billion 906 million manats to 22 billion 280 million manats. This means an increase of 4 billion 374 million manats or 24.4 percent during the year.
In terms of dollarization, the indicator of legal entities is ahead of individuals. Even in the last year, the level of dollarization of the funds they kept in banks has increased slightly. At present, approximately 51 percent of the funds of legal entities are kept in foreign currency.
In the deposit portfolio of the banking sector, attention is paid to the increase in the amount of funds kept by non-residents in Azerbaijani banks. From the dynamics of growth, it is known that since February 2022 - the beginning of the Russian-Ukraine war, an increase in the volume of funds belonging to non-residents has been observed in the country's banks. While there were 294 million manats belonging to non-residents in Azerbaijani banks at the end of January 2022, this indicator has already increased to 1 billion 174 million manats at the end of the year. This means that during the year, the amount of funds kept by citizens of foreign countries in Azerbaijani banks increased by 880 million manats.
In 2022, the loan portfolio of banks has grown by approximately 3 billion manats. While the loans of banks were equal to 16 billion 659 million manats at the end of 2021, then the same figure was 19 billion 594 million manats at the end of 2022. That is, during the year, the loan portfolio in the country increased by 17.6 percent.
According to official statistics, consumer loans increased more than business loans. By the end of 2022, business loans accounted for 55.4 percent of the loan portfolio. However, at the end of 2021, this figure was equal to 58.5 percent. During 2022, the business loan portfolio across the country grew by 1 billion 115 million manats or 11.4 percent.
During the same period, the volume of consumer loans in the country reached 5 billion 574 million manats. This means that the population's debt to banks has increased by 1 billion 236 million manats or 27 percent. Therefore, the share of consumer loans in the total loan portfolio increased from 27.1 percent to 29.4 percent.
Another noteworthy indicator related to the banking sector is related to the increase in the volume of non-cash payments. In 2022, the volume of transactions taking place in the domestic pos-terminal network amounted to 5.8 billion manats. In 2021, this figure was 3.9 billion manats.
Last year, the volume of transactions carried out through electronic commerce was 18.3 billion manats. In 2021, this indicator was equal to 7.2 billion manats.