PASHA Bank: a Gateway to Azerbaijan

Transcription

1 PASHA Bank: a Gateway to Azerbaijan Leading investment and corporate bank in Azerbaijan, owned by PASHA Holding; Established in 2007; Started full-fledged operations in Georgia in February 2013; Started full-fledged operations in Turkey in 2015; The only Azerbaijani Bank upgraded by Fitch in 2015 Key Financial Highlights (2015) Net Profit Loan Portfolio (gross) Total Capital Total Assets Azerbaijan s Best Investment Bank in 2011 &, 2012 & 2013 EMEA Finance The Best Local Bank in Azerbaijan in 2012, Eurasian Bank Survey, BNE Best Broker in Azerbaijan in 2013 EMEA Finance PASHA Capital LLC The Best Private Bank in Azerbaijan in 2013, World Finance Journal

2 Banking sector is a driving force of the economy Assets of banks, bn AZN Effect of the revaluation of FX assets due to manat devaluation Equity of banks, bn AZN The level of capitalization of banks have strengthened due to a fivefold increase in banks minimum regulatory capital requirement; As end of 2015, out of 43 local banks 23 are with foreign capital, of which, banks with foreign capital from 5 to - 8, share of foreign capital less than 5-13, local branches of foreign banks 2; In 2015, banking sector has also faced economic headwinds, and dual manat devaluations as a result of decline in oil prices have raised risks to financial stability. 13 # of banks with foreign capital, (end-2015) 2 8 banks with foreign capital from 5 to share of foreign capital less than 5 local branches of foreign banks

3 Structural & inst-l reforms are welcome to improve environment Loan portfolio of banks, bn AZN Loan portfolio y/y growth rate, % AZN loans FX loans Revaluation of FX loans due to devaluation % 64% 98% 54% 17% 9% 7% 24% 26% 17% Growth rate of loan portfolio slowed down as a result of preventive measures by regulator; - Relevant changes to the normative base regulating credit risks on a single borrower or a group of related borrowers, and on industrial concentration. Structural & institutional reforms such as consolidating the small bank segments are expected to reduce operating costs and increase competition in the sector and maintain a financial and macroeconomic stability;

4 Loan portfolio has a larger room to grow compared to peer countries 5 3 Financial depth. Banking system loan portfolio as % of GDP 22% 19% 22% 27% 31% % Loans as % of GDP (2015) 75% 77% 51% 1 1 KAZ AZE GEO RUS TUR Financial depth is increasing over years through an increase in the bank loans, however, it still lags behind the peer countries which demonstrates the potential of the Azerbaijan s banking system to grow; Financial systems generally become more market-based during the process of economic development: - This trend increases the need for hybrid (debtequity) instruments instead of ordinary bank loans, and need for private investment vehicles Assets as % of GDP (2015) 109% 116% 79% 58% 64% KAZ AZE GEO RUS TUR

5 Retail deposits per capita, $ Deposit base is expected to improve in line with the inst-l reforms Deposit portfolio of banks, bn AZN 23.5 Deposit portfolio currency breakdown, bn AZN Households Legal entities Financial institutions AZN FX Revaluation of FX deposits due to devaluation The relationship between household deposits and GDP per capita, 2014 Main depositor in the country is households: with its share in overall deposit base made up in 2015; GEO TUR AZE Nominal GDP per capita, $ Retail deposits converges upward direction as economy develops, and trust to the banks rises in light of the institutional reforms; Trust to banking industry rising with corporate governance, market transparency and accountability against customers becoming a new normal. In general, as countries become richer, retail deposit base is growing as well.

6 Perspective development directions Financial depth Access to financial services Efficiency of financial intermediation Financial stability Downsizing cash economy, widening e- payment Development of internet and distant banking mechanisms Cost efficiency Efficient regulatory framework and prudential requirements Institutional investors (private pension funds etc.) Widening branch network in the regions Competition in the market Reliable riskmanagement systems in the banks Development of equity, securities and insurance markets Availability of mortgage loans to broader base Institutional mechanism for management of NPL-s, effectively working collector agencies Market transparency, accountability against customers Global reporting and transition to audit standards Financial enlightenment of people Corporate governance standards