Azerbaijan's biggest lender posts unexpected profit in Q1

Azerbaijan's biggest lender posts unexpected profit in Q1
By bne IntelliNews April 17, 2017

The International Bank of Azerbaijan (IBA), the largest lender in the country, reported a 24% y/y increase in operating income to AZN218mn (€123.4) in the first quarter of 2017. The bank also registered a profit of AZN90mn, up from unspecified losses in 2016.

IBA's Q1 financial results are unexpectedly positive seeing how, earlier this year, ratings agencies Moody's and Fitch both anticipated a protracted recovery and continued foreign exchange-related losses for the lender. However, the poor forecasts earlier this year took place against the backdrop of an accelerated depreciation of the national currency, which has since slowed down.

Accounting for a third of banking assets in the country, IBA was taken over by the government in March 2015, after a steep depreciation of the national currency pushed it to the brink of default. Since then, Baku has purchased non-performing loans from IBA and injected AZN600mn of capital in the bank.

After rehabilitating the bank, the Azerbaijani government is hoping to privatise it - the government's share in the lender has increased from 51% in early 2015 to 91.3% at the moment.

However, analysts expect that IBA will continue to be loss-making or barely break even in the medium term, as the lender does not have a strategy to revamp its business and increase its loan portfolio, and the Azerbaijani economy is doing poorly due to low oil and gas prices, which have affected the performance of the banking sector.

In its statement published on April 14, IBA said that it continued to work on cost cutting - its plans are to save AZN48bn in operational expenses in 2017 - and reduce risk by restructuring its loan portfolio. 

Related Articles

Azerbaijani customs office underreported 2010-2015 imports by $25bn, investigation claims

Azerbaijan's customs committee failed to register some $24.8bn worth of imports between 2010 and 2015, resulting in some $5bn worth of losses for the state budget in customs taxes, an ... more

Daily: Israeli defence company probed for alleged bomb run in Armenia to impress Baku

The Israeli defence ministry is investigating a large military manufacturer, Aeronautics Defence Systems Ltd, for allegedly attempting to bomb the Armenian military while demonstrating the ... more

Azerbaijan's central bank keeps key rate unchanged at 15%

Azerbaijan's central bank has kept its key rate unchanged at 15% following its monetary policy meeting on August 1, the regulator reported. The justification for its decision, it said, is ... more

Dismiss