OREANDA-NEWS. July 26, 2011. Productive activities of the International Bank of Azerbaijan, the positive dynamics of its financial performance and sustainable development in the environment of economic stability reached in the country are often highly appreciated by world financial institutions and get international recognition, reported the press-centre of IBA.

IBA - holds the highest ratings in Azerbaijan assigned by international rating agencies, over the past ten years it has been awarded numerous prizes established by international financial institutions and renowned financial magazines in the world as the best bank in the region. Today, IBA, established itself as one of the most trusted institutions among financial institutions in the region, it plays the leading role in all segments of the financial and banking system in the country. It is not a coincidence that according to the rating of The Banker, which is published in the UK, the IBA was included among the 1000 largest and most stable banks in the world, occupying the 958-th place in terms of capital.

It is important to emphasize that the long-term issuer default rating (IDR) in foreign currency, assigned to the IBA by a competent international rating agency Fitch Rating, has been upgraded from "BB +" to investment grade "BBB-" and confirmed. This estimate corresponds to the long-term IDR of Azerbaijan. This spring, the international rating agency Moody's Investors Service changed the forecast for the long-term rating of "Ba2" on foreign currency deposits of the International Bank of Azerbaijan from "stable" to "positive" and the other bank’s ratings have been maintained on the same level.

We should note that the current international rating agencies are very cautious in granting a higher rating subject to the uncertainty of debt problems in several European countries in the eurozone. But especially utmost care international rating agencies show in relation to the companies and banks operating in emerging markets. Given the strict rules and trends of international agencies in compiling the ratings, one can appreciate the work done by the IBA management that enabled the world's leading organizations to improve the ranking of Azeri bank.

The first half-year of 2011 is already behind, and the International Bank of Azerbaijan has summed up for the past period. The Bank presented the data on the financial results and its activities in the field of international business.

Expanding its activities in global financial markets, the IBA contributed to the success of of projects and transactions in the first half-year, which allowed to attract more foreign investment to the country. The Bank has concluded a number of loan agreements with major international banks and investment companies. New correspondent relationships have been established with 90 financial institutions around the world.

During the reporting period the bank managed to attract funds from foreign sources (banks and investment funds) worth about 250 million U.S. dollars. For example, in February 2011 an agreement with the "Deutsche Bank" was signed to attract funds amounting to USD 50 million for the period of two years. Only from a variety of foreign funds we have managed to raise more than USD 60 million. Also more than 100 million U.S. dollars were attracted from other banks such as "Societe Generale", "VTB - France", "Amsterdam Trade Bank", "Demir Halk Bank", etc.

In addition to the above, for the first time in the history of Azerbaijan we managed to arrange a deal with the use of precious metal (gold) in order to raise funds in excess of USD 30 million through the structured finance instruments.

Given the lack of available funds on international financial markets, the IBA managed to attract most of the mentioned funds for more than 1 year, and this fact along with other aspects is an irrefutable proof of a qualitatively new level of development of its international relations, the growth of confidence and high interest of foreign investors in the Azerbaijani bank.

At the same time, the IBA provides timely repayment of foreign loans made to them, that in modern conditions is extremely important. In 2008-2009 the total amount of repayments was over USD 1 billion, for 2010 -172. 660 000 U.S. dollars and 31.5 million euros. Within six months of this year, the bank repaid foreign debts amounting to 302.265.369 dollars and 27.5 million euros.

Moody's in its report emphasizes that the IBA is of strategic importance, as historically plays an important role in the implementation of public investment and economic policy, acting as an agent for the government to finance large-scale projects of national importance for Azerbaijan.

The IBA today finances dozens of projects aimed at ensuring the modernization of Azerbaijan's economy. These are projects in the field of innovation, industry, construction and electricity. The Bank, in particular, has financed projects to develop wind power in the republic, the establishment of infrastructure for mobile communications, the development of metallurgical industry, agriculture and various industrial enterprises, and continues to work actively in this direction.

Proceeding directly to the financial performance, it would be worth noting, that the IBA is still the leader in many areas of the banking sector. Thus, the bank's assets from the beginning of the year increased by 8% and at the end of the first half-year amounted to 4 billion 951 million manats, and that does not include the financing of public projects by the Central Bank serviced by the IBA, the amount of which currently stands at over 955 million manat. The loan portfolio over six months increased by 7% (more than 200 million manats) and amounted to 3 billion 153 million manats, or about 39% of the credit market. About 60% of credits issued per semester are non-state sector, mainly in the spheres of industry (45 million manats), Trade and Services (103 million manats) and agriculture (9.6 million manats). Loans of various kinds worth 26 million manats were issued to individuals, such as car loans, mortgage and collateral loans, and many other types of lending, which shows the direct involvement of the bank in the social sphere of the republic.

In all of this, the proportion of bad and dangerous loans at the end of half-year was only 5.5% of the total loan portfolio, which in total is just over 169 million manats.

Confidence in the bank continues to grow both outside the country and in the domestic market. The IBA still has the largest client base in the region. At the end of June this year, the number of clients reached 767,000, of which 753 000 - individuals. Naturally, the bank's priority is to improve the quality of customer service. Being guided by this principle, it was decided last year to optimize business processes in the branches and the process approaches its completion. In addition, it has already been for a year that a "CRM" project (customer relationship management) started and this project will give an opportunity to work more closely with the customers of the bank, create a flexible system of servicing that allows to provide banking services individually depending on the nature and needs of our customers. The Bank is also actively continuing to build innovative customer service system, such as "Internet Banking", "Mobile Banking", "Electronic commerce" and other high-tech products, increasing the level of service.

As a consequence of the above, despite the fact that the bank has lowered interest rates on deposits, only over the six months of this year, fixed-term deposits from the public to the IBA increased by 16% and made already \\$ 603 million manats, while total deposits of individuals exceed 810 million manats. Income of the population from investments in the IBA over six months amounted to more than 33 million manats, and this is more by 37% against the same period last year. In general, the bank's liabilities at the end of six months increased by 9% and made USD 4.26 billion manats.

The authorized capital of the only state-controlled bank as of July 1 this year amounted to 240 million manats and the balance capital rose in six months by 3.5% to 689 million manats. Over the six months IBA transferred to the budget of the republic about 15 million manats of various taxes.

As a result of financial operations of IBA for the six months in 2011, it should be noted, that the IBA’s revenues totaled 170.8 million manats, while profit before tax amounted to more than 14.4 million manats, which is also an indicator of stability and prosperity of the bank.

The International Bank of Azerbaijan attaches special importance to the business of banking cards. It is known that the development of cashless payments using plastic cards has an overall economic value, and this is one of the main directions of the IBA.

At present, the number of active cards of the bank’s clients is more than 1.8 million pieces, and this is more than 40 percent of the country's card market. For the six months of 2011 the turnover of card transactions totaled 1.4 billion manats. For comparison, it should be noted, that in 2002 the number of cards in the International Bank of Azerbaijan was 28 thousand pieces, and the turnover of card transactions was at the level of 71 million U.S. dollars. The IBA also develops its own acquiring network: so far in the big stores, famous boutiques, restaurants, hotels, etc. 3613 POS-terminals were installed.

It should also be noted that recently the Center for Economic Analysis, "RIA-Analytics" has completed a study of the banking system of the CIS as of 2010. The International Bank of Azerbaijan was among the 50 largest banks in the CIS, taking 33rd place in the ranking. Countries such as Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Armenia failed to be enrolled in the list, because, as according to the experts from "RIA-Analytics", they do not have banks with necessary amount of assets to get enrolled in the rating.

For each of the national banking system the main question today is, how in the short term using the experience and capacity to ensure its sustainable development in the newly emerging global financial architecture, says the IBA. The staff of the bank is sure that the International Bank of Azerbaijan in the future will also retain its leading position in the domestic banking sector and will remain the most effective financial institution in the country that determines its image in the international arena.