Azerbaijan notes positive dynamics in banking sector to grow entrepreneurship

Positive dynamics were observed in the banking sector of Azerbaijan compared to last year. Thus, the net profit that Azerbaijan's banking sector made from January to November of this year amounted to 997.4 million manats. According to the Central Bank of Azerbaijan, this is 16.1% higher than the same period last year.

Note that bank operating income was 4 billion 393.4 million manats (23.8% higher than the same period last year), operating expenses were 2 billion 828.3 million manats (24.9% increase), special reserve allocations were 315.7 million AZN (39.4% increase), other income was 2.6 million AZN (expenses 1 year ago), and income tax payments were 254.6 million AZN (29.5% increase).

Economist Eyyub Karimli, commenting on the latest growth figures in the banking sector to Azernews, said that the indicators in banking are promising and that it has also resulted in an increase in business in Azerbaijan. Overall, the bank's loan portfolio shows that credits granted to the production and business fields have increased.

“In general, the banking sector's profit increased by 23.8 percent over last year, giving us reason to believe that this year, despite the closure of one bank in the country, bank activity developed in a more positive dynamic and had a positive effect on the development of entrepreneurship in this country. When we look at the loan portfolios of banks today, we see an increase in the value of loans allocated to both consumer and business subjects,” Karimli said.

He also emphasised non-oil industries, the role of owners in this positive trend, the owner’s impact on the loan credit portfolio, and its impact on businesses.

"On the other hand, despite the country's current high credit interest rates, entrepreneurs benefit from this, and this increases ownership activity in the country, which results in banks taking more income, so the value of loans has also increased, as has the value of the loan portfolio. In this regard, I believe there are also loans aimed at the development of the non-oil sector,” the expert added.

The economist also touched on the current relationship between international and local banks, highlighting that foreign financial support isn't currently provided to our local banks. According to him, regarding our local banks' future prospects for international cooperation, experts believe that the opportunity to attract cheaper loans will have a positive impact on our banks' profits and growth.

“I also think that our banks have very weak international relations, and banks in the country do not use foreign financial support. There are certain restrictions at this legislative level, and if we can attract cheaper loans, our banks can have a significant impact on their profits and the growth of the real sector,” he underlined.

Economist Eyyub Karimli also believes that this trend will continue in the country in the coming years, contributing to the advancement of alternative green energy, construction, and the oil and gas industry. Furthermore, he stated that the benefits of liberated areas will lay the groundwork for a new stage in Azerbaijan's economy.

"I believe the country will grow further in the coming years. As you know, 2024 has been declared the Green World Solidarity Year in Azerbaijan, which will increase green alternative energy and energy supply in this area, and the country's oil and gas structure and logistics capabilities will expand. Also, the reintegration of the liberated regions into the economy in conjunction with the Great Return suggests that a new stage, a new period in the country's economy, is already underway, which, of course, will ensure the country's overall economic development," the expert concluded.