Standard & Poor’s: Azerbaijani banks to maintain the status quo on interest rates
Azerbaijan, Baku, Feb. 15 / Trend A.Akhundov /
Azerbaijani banks will not agree on a significant change of interest rates on loans and deposits, leading analyst of the Standard & Poor's Viktor Nikolsky told Trend on Wednesday.
"Azerbaijan's economy is highly dependent on oil prices and interest rates are also tied to this price. Assuming an average of $100 per barrel as well as the policy of the Central Bank of Azerbaijan and commercial banks, I think rates will remain approximately at the current level," Mr Nikolsky said.
He noted rates on loans cannot greatly decrease due to a quite large share of those overdue on the loan portfolios of banks.
"Banks cannot cheapen the value of their assets because there is a significant part of either liquid assets that do not actually bring any interest margins, or assets that do not generate any interest because they are overdue. Significant change in the rate of deposits is unlikely. Deposit rate in the medium term is likely to be downward. This is related to the current high liquidity of the banking sector," he said.
There were no significant changes in nominal interest rates on loans and deposits in 2011, unlike the real rate. Thus, the average interest rate on deposits was 11 per cent and for loans 16-17 per cent.
The average interest rate on loans in national currency, the manat in Azerbaijani banks was 16.27 per cent as of Jan 1, 2012 against 16.24 per cent as of Dec 1 and 16.37 per cent as of Jan 1, 2011.
According to the CBA, the average rate on bank loans in foreign currency amounted to 16.79 per cent, while as of Dec 1, 2011, the figure was 16.34 per cent, and as of Jan 1, 2011, 17.31 per cent.
The average rate on deposits in manat was 10.62 per cent as of Jan 1, 2012 against 10.65 per cent as of Dec 1, 2011 and 11.11 per cent as of Jan 1, 2011.
The average rate on deposits in foreign currency amounted to 11.11 per cent against 11.27 per cent and 11.64 per cent respectively.