Azerbaijani banks cut interest rates on deposits - REVIEW

Baku. 5 May. REPORT.AZ/ Recently, there are major changes in return on deposits in the banking sector of Azerbaijan. So, if the bank had previously set a single interest rate for deposits in local and foreign currency, after February 34% devaluation of the manat, they began to gradually curt the cost of foreign currency deposits.

On the results of the initial observations of the market, Report News Agency revealed that, today the banking sector of Azerbaijan, the interest rate on deposits paid to the leading banks of the country, depending on the term deposit changes as follows:

Interesting that, the interest rate on deposits in manat exceeded even the Deposit Insurance Fund established maximum mark (12%). This is due to shortage of manats in the financial markets of the country. Most individuals converted their deposits into foreign currency. If, before the devaluation of the major differences in the interest rates on deposits in local and foreign currency was not, as the table shows, by far the banks have significantly reduced the profitability of deposits in foreign currency.

According to analytical group Report, a similar situation in the market due to the fact that at this stage the need for commercial banks on deposits in foreign currency is low. This is due to a decrease in customer demand for loans in foreign currencies and the reluctance of banks to make loans in manat against the supposed next wave of devaluation. That is, banks are not at risk and to convert foreign currency to lend in local currency.

The result is a situation causing serious damage to banks. Because the main income of Azerbaijani banks is formed at the expense of lending. However, the population and corporate clients show interest mainly to manat lending, banks are interested in placing the deposit base in foreign currency.

Analysts predict Report preserve the current situation until the end of the year: the financial system is not changed, and the oil price increase is not enough to change someone else's decision.

So interesting that, the interest rate on deposits in manat exceeded even the maximum mark (12%) established by the Deposit Insurance Fund. This is due to shortage of manats in the financial markets of the country. Most individuals converted their deposits into foreign currency. If, before the devaluation of the major differences in the interest rates on deposits in local and foreign currency was not available, as the table shows, by far the banks have significantly reduced the profitability of deposits in foreign currency.

According to analytical group of Report agency, a similar situation in the market due to the fact that at this stage the need for commercial banks on deposits in foreign currency is low. This is due to a decrease in customer demand for loans in foreign currencies and the reluctance of banks to make loans in manat against the supposed next wave of devaluation. That's to say, banks are not at risk and to convert foreign currency to lend in local currency.

The result is a situation causing serious damage to banks. Because the main income of Azerbaijani banks is formed at the expense of lending. However, the population and corporate clients show interest mainly to manat lending, banks are interested in placing the deposit base in foreign currency.

Report nalysts predict that, the current situation to be preserves up to the end of this year: the financial system is not changed, and the oil price increase is not enough to change someone else's decision.