BAKU, Azerbaijan, Feb.3. Azerbaijani banks have had the most pronounced improvement since 2021, aided by a shift to granular local-currency lending and tighter affordability criteria, Trend reports via Fitch Ratings.
Fitch notes that easing legacy asset-quality risks supported Azerbaijani banks’ profitability. Rapid loan growth and dividends have reduced capital buffers, but Fitch expects capitalisation to remain broadly stable in 2026. Adequate profitability and moderate asset growth will support this.
“Foreign-currency loans in Azerbaijan were a low 14% at end-9M25, supported by the Azerbaijani manat’s effective peg to the US dollar and strict foreign-currency lending rules,” reads the latest report by Fitch.
Banks in Azerbaijan are rated below the sovereign (BBB-/Stable), reflecting Fitch’s assessment of the banks’ standalone profiles and of the operating environment (bb-/stable). Strengthened regulations and sustained financial metrics may lead to rating upside in Azerbaijan.