"The costs of banks in Azerbaijan are quite high, which, of course, affect the interest rates of loans," Davit Tsiklauri, Chairman of the Management Board of AccessBank said in an interview with Paralel.Az-Economics.

"In costs I also mean interest rates on deposits – 1 year deposits are within 10-11% for manats.

Usually, entrepreneurs compare loan interest rates in Azerbaijan with those in Europe, and 2 or 3-years ago stating starting point there was at around 2%. But more recently even there interest rates increased significantly . Currently, the European Central Bank's discount rate is almost 5%, and the FED's discount rate is higher than 5%. Discount rates are currently high globally. In Azerbaijan, for example, consumer loans are offered between 11-22%. That is, one client could get a loan at 11%, another one with 22%. The question is, what causes this difference? This difference usually depends on the customer's risk profile. A high-risk customer is offered a loan at a high interest rate, and vice versa. If you offer a standard one loan rate to everyone, it will mean that a low-risk customer compensates for the risks of a high-risk customer. So if the Loan interest will be low, let’s say at 11% and at the same time deposits remain at current interest rates of around 10% then the whole rationale of banking will breakdown as costs will exceed revenue," Davit Tsiklauri added.