Expert opinion: Question of high credit interests clarified


June 14, Fineko/ Deposit interests play one of the main roles in the formation of credit interests, as they are the basis for the formation of the prime cost, expert economist Elman Sadigov says.

"Firstly, because not deposits, but many other financial sources play the key role in the formation of funds at banks in foreign countries. If banks raise deposits up to 12% per annum, this does not mean that all these deposits are used in lending. Usually, banks use up to 70% of the raised deposits in lending. The remaining part of the liquidity, which was not used for any shock events and other reasons, is about 30% of the cost of credit interests. So, the prime cost of 12% of annual deposit interests, about which we are talking about, is actually about 15-16%," the expert explained.