The Business Year

Emin Aghayev

Chief Executive, Günay Bank

Günay Bank was the first major private bank of Azerbaijan following the country’s independence. The banks established prior to us had some share of state capital and state funding; we were the first fully private bank. Our policy has been to remain a boutique bank and retain a small number of clients. I am proud to say that all the customers who started with us in the 1992 to 1995 period have remained with our bank. Today, we are working to increase our capital to AZN50 million in order to comply with the latest legal requirements. Currently, we have capital of AZN16 million, but by the summer of 2014, the figure is predicted to be at around AZN30 million to AZN35 million. We became a public company in order to raise our capital, and we have plans for two issuances of AZN10 million and AZN27 million, respectively. The latter should start in June 2014, and we are hoping to place all the shares by the end of the year.

Zakhra Guliyeva

Chairperson, Zamin Bank

The Azerbaijani authorities have introduced a special program to support micro-, small-, and medium-sized enterprises (MSMEs) called the Azerbaijani National Fund for Entrepreneurship Support (ANFES). Financial assets are provided to a partner bank at a low interest rate on the debt of 6%, with borrowers subsequently receiving the loan from that bank. MSMEs need to obtain an approval of their business-plan from the ANFES to be eligible for the loan. Another government initiative considered to assist in the development of new financial instruments, such as mortgage financing, is the Azerbaijan Mortgage Fund. The upper limit for a mortgage loan is AZN50,000, which allows one to purchase a good-sized two-room apartment in the city center. Zamin Bank is participating in this initiative and has provided AZN33 million in mortgage lending to date. Mortgage loans were extremely popular with our customers in 2011 to 2012, and we are planning to expand our mortgage services in 2014. There is also an initiative in the agribusiness sector that Zamin Bank participates in. Accordingly, the National Fund for Agribusiness Support is providing assets to partner banks, whereupon MSMEs receive a loan from the bank at a particularly low interest rate. All of these incentives are promoted and subsidized by the government.

Hüseyin Özmen

Chairman of the Board, Hüseyin Özmen

Recently, significant competition in the granting of consumer loans has been noticed, and the requirements for granting loans have changed. While banks are working to increase their portfolio, it is important to properly assess the customer’s ability to repay debts. Too heavy a focus on consumer lending weakens the financing of other areas, such as industry, agriculture, and manufacturing, which in turn has an adverse effect on the economy. Currently, consumer loans account for 40% of total lending in Azerbaijan. The banks must correct this to better play their role in ensuring economic stability. President Ilham Aliyev himself expressed his concerns over this issue, and emphasized the importance of focusing loans on the real economy. It is clear from his statements that he envisages the banking sector supporting the economy, given that a stable banking sector is a prerequisite for economic prosperity. The Central Bank of Azerbaijan’s (CBAR) recent policy was in the same vein, as it took measures to shift credit to the industrial sector. As a result of these measures, I expect the banking sector to become more liquid, regulated, and stable.



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