BAKU, Azerbaijan, Feb. 25. Asset quality of Azerbaijani banks will remain good in the next 12-18 months, Trend reports via Moody’s.
The rating agency notes that loan performance will benefit from favourable economic conditions, with borrowers' debt-repayment capacity strengthening thanks to robust performance in non-oil sectors and rising total income levels in Azerbaijan.
“Problem loans for the banking sector were 2.5% of gross loans as of December 2025 (2.4% in 2024 and 2.6% in 2023), while reserve coverage of problem loans was strong at above 220%. Loan performance will benefit from the tight regulatory framework for consumer lending, while the stable local currency (manat) will be positive for performance of foreign-currency loans (14.2% of total loans as of December 2025),” the report reads.
Moody’s rates five out of 22 commercial banks operating in Azerbaijan, which together accounted for around 56% of total system assets as of 31 December 2025.
According to the Central Bank of Azerbaijan, total assets of banks operating in the country stood at 57.086 billion manat as of December 31, 2025, with total liabilities at 49.744 billion manat and equity at 7.343 billion manat.
Over the course of 2025, total assets increased by 7.7%, liabilities rose 7.2%, and equity grew 11%.
In the reporting month, the banking sector’s loan portfolio expanded by 1.3% (377.5 million manat) to 30.063 billion manat. The portfolio breakdown was as follows:
Business loans: 53.6% (16.106 billion manat)
Consumer loans: 31.1% (9.354 billion manat)
Mortgage loans: 15.3% (4.603 billion manat)
For the full year, the loan portfolio grew 9.4% (2.585 billion manat), including increases of 1.319 billion manat for business loans, 909.3 million manat for consumer loans, and 357 million manat for mortgages.
Banks posted a net profit of 1.162 billion manat and an operating profit of 1.862 billion manat for 2025.