The entry of foreign banks into Azerbaijan could increase competition and create conditions for lower loan rates, but cheaper borrowing would not be guaranteed.
Interest and similar income earned by Azerbaijani banks reached 4.189 billion manats as of Sept. 30, 2026, according to figures cited in a television report. That was about 522.5 million manats more than in the same period a year earlier.
High borrowing costs remain a frequent complaint among customers. One person interviewed for the report said he had been offered a loan carrying a 25% annual interest rate.
What Foreign Banks Could Change
Analysts link high rates partly to limited competition and banks’ dependence on deposit funding. New foreign participants could bring alternative capital, technology and products, pressuring existing banks to reconsider their lending terms.
Azerbaijan is nevertheless a relatively small market, and major international banks would have to decide whether the cost of entering the country could be justified.
Lawmaker Vugar Bayramov has also warned that foreign and domestic banks may have very different competitive capacities. More competition could benefit customers while creating significant pressure for some local lenders.
Central Bank Governor Taleh Kazimov has said the regulator supports the entry of foreign banks. He said greater foreign participation could strengthen human capital, information technology and competition in Azerbaijan’s financial sector.
The question for borrowers is whether new banks would ultimately offer meaningfully lower rates. For now, that remains a possible effect of greater competition, not a decision to reduce lending costs.
Sources: Vesti Baku; Report