Azerbaijani banks not ready for serious decline in interest rates on loans

Azerbaijan, Baku, 18 May / Trend L.Abdullaeva /

Azerbaijani banks are not ready to take first steps toward lowering the rates against the background of rather expensive loans, particularly in retail lending, a member of the Board of VTB Bank (Azerbaijan) Ilgar Novruzov said.

"There are objective reasons for this, namely the inability of banks to raise funds from foreign investors on sufficiently favorable terms; unwillingness of the population to place funds at lower interest rates, which entails a rise in banks' funding base; the lack of alternative financial instruments and derivatives; low penetration of loans to GDP and so forth," Novruzov told Trend.

If we analyze the level of interest rates in the credit market of Azerbaijan, VTB Bank (Azerbaijan) offers products at lower rates than other banks on the market, he added.

"Of course, it primarily occurs due to the fact that we, as a fully functional subsidiary of VTB Group, have access to its resources, which are attracted on better conditions than local banks may afford, and it certainly is our competitive advantage," Novruzov said.
Meanwhile, CBA is examining the banking market in order to clarify the situation with interest rates on loans and the reasons for their high level.

According to the chairman of the board of the Central Bank of Azerbaijan Elman Rustamov, there is a trend to lower the interest rates. However, they remain at a high level, especially for consumer loans. According to the research, the CBA will give appropriate instructions to the banks.

According to the bankers, the banks may not lend at a rate below the deposit rate as they must take into account their income and cover potential losses from bad loans. Rates on deposits in Azerbaijan currently form 10-12 percent per annum. This is how the cost of credit resources provided by banks to customers is being formed. In addition to the cost of resources, the bank adds its own margin (a mark-up on the resource) to an amount that covers the loss and generates income for the bank.

Today, banks provide financing services to citizens on average at a rate of 28-32 percent. The effective rate reaches up to 40 percent per annum.

According to the statistics of CBA, banks continue to cut interest rates on loans in local and foreign currencies compared to the same period last year. Thus, the average rate on bank lending to the economy of Azerbaijan in national currency amounted to 14.85 percent compared to 16.09 percent as of April 1, 2012. The average rate on bank lending in foreign currency was 15.3 percent compared to 16.16 percent in early April 2012.

On 1 April 2013, the average rate on bank lending to individuals in national currency amounted to 18.31 percent compared to 18.57 percent as of April 1, 2012. The average rate on bank loans to individual customers in foreign currency was 21.6 percent compared to 22.07 percent by April 1, 2012.

Subscribe to Trend in Google News! Subscribe
Azerbaijan completes over half of construction of Barda-Aghdam highway
Azerbaijan completes over half of construction of Barda-Aghdam highway
Azerbaijan-Iran plan to build new bridge to increase traffic
Azerbaijan-Iran plan to build new bridge to increase traffic
Azerbaijan shares data on 10M2021 oil exports to Vietnam
Azerbaijan shares data on 10M2021 oil exports to Vietnam
Loading Bars
Latest
Azerbaijan completes over half of construction of Barda-Aghdam highway
Azerbaijan building new high-speed road in Shusha city
Azerbaijan-Iran plan to build new bridge to increase traffic
Iran Securities and Exchange Organization focusing on strengthening Capital Market Stabilization Fund
Iran looks to expand agricultural ties with Romania
EIB, EBRD touch on Georgia’s economic growth
Price indexes of industrial, trade sectors at Uzbek stock exchange fall
Georgia shortens terms of COVID-19 booster vaccination
Azerbaijan shares data on 10M2021 oil exports to Vietnam
Uzbekistan shares stats on export of textile products for 10M2021
Kazakhstan's KMG talks project of new gas processing plant in Mangistau
Iran's Bahar Azadi gold coin price increases
Azerbaijan sees decrease in import of vehicles, spare parts over 10M2021
Volume of loaded/unloaded cargo in Iran’s Qeshm port up
Value of Azerbaijan's export to Turkmenistan up for 10M2021
Azerbaijan’s energy ministry opens tender to buy technical support services
Azerbaijan-Iran to take steps to increase trade turnover – Iranian ambassador
Shootout occurs on border between Azerbaijan and Iran - offender neutralized
Baku Int'l Sea Trade Port reveals details of dev’t strategy until 2035
First harvest gathered in mushroom greenhouse in Turkmenistan’s Mary region
Azerbaijan-Iran implementing agreements on joint cooperation – ambassador
Germany's next finance minister stresses price stability
SOFAZ shares estimates of budget revenues for 2022
Iran opens office for cargo barter with Pakistan
Number of legal entities restoring activity in Azerbaijan slightly increases in 11M2021
President Ilham Aliyev receives President for Exploration and Production of TotalEnergies
Indian embassy in Baku holds webinar on electronic and computer hardware/software products (PHOTO)
Sport in Azerbaijan - integral part of state policy, deputy minister says
Bank of Israel bought $4 bln of FX in Nov, hits $34 bln in 2021
India's Rajnath Singh attends maiden 2+2 Dialogue with Russia
Less urgent need to rebuild stocks to weigh on coal demand
Omicron poses a major risk to global oil demand
Azerbaijan shares data on number of vaccinated citizens
Azerbaijan confirms 1,530 more COVID-19 cases, 1,864 recoveries
Azerbaijan, Russia’s Astrakhan sign action program to develop co-op (PHOTO)
Georgia shares data on cigarettes turnover in 10M2021
President Ilham Aliyev signs order appointing new chairman of State Insurance Commerce Company
Georgia’s imports of fuel and lubricants from Kazakhstan plummet
EU health bodies recommend mix-and-match of COVID-19 vaccines
Georgian apple exports on rise
Number of taxpayers increases in Azerbaijan over 11M2021
Kazakhstan increases volume of production of crude oil and oil products
Kazakhstan shares data on coal production
Turkmenistan becomes top oil exporter to Georgia
Armenia should fulfill requirements of documents signed after Second Karabakh War – Turkish official
Google Pay begins operating in Israel
Volume of electricity production in Uzbekistan for 10M2021 unveiled
Azerbaijan records growth in cost of air cargo trasport for 10M2021
Iran reveals COVID-19 data for December 7
Central Bank of Azerbaijan reveals amount of foreign currency sold via auction
Non-oil exports in Azerbaijan to reach record high – minister
Opening of Azerbaijan’s Zangazur corridor may reduce transportation time from China to Europe
Azerbaijan to auction several mineral deposits
Epsilon obtains industrial gas inflow from new well at field in Uzbekistan
bp to develop best barrels, make portfolio higher value, says CEO
Azerbaijani State Tourism Agency talks about prices for air tickets (Exclusive)
Iran’s IMPASCO aims to transfer shares of some mining complexes to private sector
bp going to invest 10 times more in low carbon by 2030 - Bernard Looney
What does gas swap deal between Azerbaijan, Turkmenistan and Iran promise?
Baku Stock Exchange talks priorities in trade turnover until 2023
Turkey, Iran trade turnover grows in October 2021
Georgia shares top importers of its hazelnuts
bp achieves increase in productivity in Azerbaijan with new agile organizational structure
Russia’s new daily coronavirus cases below 32,000 for first time since October 14
Iran pins big hopes on gas swap contract, aims for European exports in near future, says ambassador (Exclusive)
Turkmen agriculture ministry opens tender for purchase of veterinary vaccines
Iran eyes increase in flights via Rasht International Airport
Kazakh oilfield construction company opens tender to buy pipes
Kazakhstan eyes diversifying trade flows with ECO countries
Azerbaijan’s Baku Int’l Sea Trade Port expects increase in flow of goods
Georgia’s spice exports to Central Asia down
Uzbekistan reveals volume of exports and imports for 10M2021
Volume of foreign trade turnover increases in Uzbekistan
Kazakhstan sees multifold decrease in trade with South Korea
Eurostat discloses Azerbaijan’s petroleum exports to Italy
Bank of Georgia to begin offering preferential agro-credit
Georgia’s export of spices remains steady - Geostat
Azerbaijan’s oil exports to Romania for 10M2021revealed
Baku port reveals cargo shipment capability of Ro-Ro terminal
Azerbaijan shares forecast on total cargo shipment via Baku int'l trade port for 2021 (PHOTO)
Kazakh Ulba Metallurgical Plant opens tender for cargo transportation services
Azerbaijan may potentially develop transit communications with int’l transport corridors - Russian analyst
Iran continues work on Chabahar – Zahedan railway project
Eurostat reveals Spain’s petroleum oils import from Azerbaijan
Azerbaijan talks impact of border restrictions on tourism due to COVID-19
Germany’s petroleum oil imports from Azerbaijan disclosed
Iran Metafo exhibition showcasing country's steel, mining industries
Azerbaijan discloses oil exports to Indonesia for 10M2021
NATO’s Mobile Training Team conducts courses - Azerbaijani MoD (PHOTO)
Iran’s SPGC launches final turbo compressor in 12th refinery at South Pars gas field
UAE announces move to Saturday-Sunday weekend
Bodies of 13 miners discovered at site of Kuzbass mine tragedy
Kazakhstan talks importance of building missing section of North-South transport corridor
Azerbaijan discloses oil exports to Thailand over 10M2021
Azerbaijan’s 10M2021 oil exports to Czech Republic revealed
Azerbaijan reveals oil exports to China in 10M2021
EAEU countries to reduce carbon emissions from rail transport
Omani, Saudi firms sign $30 bln in MoUs amid Saudi crown prince's visit
Iran's air fleet remains crippled as half of planes are 'irreparable'
Each visit of Azerbaijani President Ilham Aliyev to country's districts aimed at their dev’t, increasing welfare of citizens
All news