Economist: Situation in banking sector is not easy
easures that should be taken to stabilize situation in the banking sector can be divided into two parts including measures taken by the government and those realized by banks, said Shakir Rahimov, deputy head of AccessBank.
Rahimov talking to Trend stated that the situation in the banking sector is not simple.
“The banking sector is vulnerable to changes. Unfavorable processes, as well as worsening of macroeconomic indicators in 20152016 have negatively influenced the sphere. The negative processes include drop in oil prices, devaluation of the manat, dollarization of the economy, decrease in GDP growth rate, devaluation of national currencies in neighboring countries as well as reduction in money transfers of our citizens living abroad,” he said.
Along with the problems that were triggered by the crisis in the world, the banking sector also faced certain problems that were connected with insufficient risk-management, which in its turn lead to the growth of bad loans, losses and problems with liquidity.
“The state has already taken measures that gave certain results and allowed improving the situation in the market. One of the main steps, in my opinion, is a decision on the full insurance of deposits of the population which halted the outflow of deposits from the bank. Nevertheless, main portion of deposits is kept in USD, in this regards banks face difficulties with the deposit allocation as the demand on dollar credits is low. The issue leads to the fact that banks keep out from their principal activity – crediting of entrepreneurs and population. Therefore, banks are in need of long-term manat resources that can be allocated to customers. Of course, there is also a necessity for a mechanism, which will guarantee efficiency of the funds,” he said.
He also underlined the importance of establishing a loan office, which will allow more effective risk assessment, as well as decrease the risk margin.
Commenting on the measures
By Nigar Abbasova M
that should be taken by banks, the expert said that banks should assess the volume of losses and act on the basis of new realia. He believes that majority of banks face more serious damages due to their unwillingness to admit the losses in time.
He underlined that the banks should interact and exchange experience and information. The issue becomes more relevant during crisis when problems of certain bank may lead to the distrust to a whole banking sector.
Talking on the role of banks in the development of business, he emphasized the importance of the domestic production. Banks should issue credits to businesses with a good credit history for the further development of the domestic production, which is aimed at replacement of import.
“Crediting of enterprises engaged in the sphere of domestic production is a priority for AccessBank. Some 90 percent of our credit portfolio is placed in micro, medium and macro entrepreneurship mainly in the regions of the country,” he added.
Recently, Financial Market Supervisory Body reported that it is currently engaged in the developing of an individual program on strengthening financial stability for every bank of the country.
Currently, 33 banks have licenses for implementing banking activities in Azerbaijan. Licenses of DekaBank, KredoBank, Parabank and Zaminbank have been recently abolished due to the failure of banks to meet necessary requirements specified in the relevant legislation. Relevant decision was taken by the Financial Market Supervisory Body.
The CBA switched to a floating rate of the manat, the national currency of Azerbaijan on December 21, 2015 following intensifying external economic shocks. The exchange rate between the manat and US dollar changed from 1.0499 to 1.5500 after the shift.