BAKU, Azerbaijan, February 9. Credit figures of banks in Armenia, Azerbaijan, and Georgia remain strong and exceed historical average levels, Trend reports via the Fitch Ratings international agency.
The sector is supported by sustainable economic growth, improving sovereign credit profiles, and the ongoing indirect effects of the conflict in Ukraine.
"From 2022 through September 2025, the banks of the region demonstrated record profitability. The net interest margin increased by one to two percentage points against the background of the increase in interest rates. Armenian banks, to a lesser extent, and Georgian banks received additional benefits due to the increase in commission income related to transit trade, migration, and payment flows from Russia. In Azerbaijan, the reduction of risks related to problem assets of the past years contributed to the increased profitability of banks.
Capital adequacy indicators remain high in Armenia and Georgia thanks to strong profits and strict regulatory requirements. In Azerbaijan, the rapid growth of lending and the payment of dividends led to the reduction of capital buffers; however, Fitch expects that the level of capitalization in 2026 will generally remain stable. Sufficient profitability and moderate asset growth will contribute to this," the Fitch report said.
The report noted that the quality of assets in the region has improved, although the further decrease in the share of problem loans may be limited due to the already low level of such assets.
"The most noticeable progress has been recorded in Azerbaijani banks since 2021, which was facilitated by the transition to more detailed lending in the national currency and the tightening of requirements for the solvency of borrowers," the report explained.
The level of dollarization has decreased but remains high in Georgia (42% of credits at the end of nine months of 2025) and Armenia (34%).
The report highlighted that in Azerbaijan, the proportion of foreign currency loans is notably low at 14%. This situation is attributed to the manat's direct linkage to the U.S. dollar and the stringent regulations governing foreign currency lending.
"The liquidity of banks remains comfortable. However, by the end of nine months of 2025, the average ratio of credits to deposits in the sector exceeded 105% in Armenia and Georgia (for comparison: at the end of 2022—82% and 101%, respectively) against the background of the normalization of the inflow of deposits. In Azerbaijan, this indicator was 80%.
The ratings of banks in the region vary from "B" to 'BB+'. The ratings of the largest banks in Georgia (BB/stable) and Armenia (BB-/positive) correspond to the sovereign ratings of these countries. Banks of Azerbaijan are rated below the sovereign level (BBB-/stable), which reflects the agency's assessment of their independent financial profiles and operating environment (bb-/stable). Strengthening regulation and stable financial indicators can contribute to the improvement of the ratings of the banks of Azerbaijan," Fitch added.