Expert: Banks lose even more as risks grow


June 14, Fineko/ "Our country's banks are not transnational banks, and we do not have direct access to the world's money markets. There are conditions for direct access to derivatives, world markets for international financial transactions, or at least international money markets to attract a cheap fund," says expert economist Elman Sadigov.

The expert believes that many of those conditions cannot be obtained by banks in any developing country.

"If we compare bank credit interests with bank interests in developed countries, we should also take into account the stock exchange, financing and other factors (for example, quick procedures to solve problem loans, etc.). If we add costs and risks to annual deposit interests on each of the above-mentioned facts, we’ll see why credit interests make up 30-32%. High interests increases a probability of loan repayment and risks. As risks increase, banks lose even more. That is, a high level of financing means a high interest of the loan, which in turn means a large number of problem loans. For these reasons, banks are not interested in high credit interest rates. The biggest interest of banks is to achieve sources with a low level of financing, so that in exchange for lower costs they could have lower interest loans, so that the probability of repayment of these loans would be high," the expert emphasized.