Azerbaijani banks have had most pronounced improvement since 2021 – Fitch

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.