The international rating agency "Fitch Ratings" has assessed the 2026 forecast for the banking sector of Azerbaijan as neutral, APA-Economics reports, citing the rating agency.
According to the information, despite a slight weakening of economic growth and a slowdown in the pace of lending, the overall financial indicators of the banking sector are expected to remain stable. It is emphasized that the growth will mainly come from the non-oil sector, and the profitability of banks will still remain quite high. This profitability gives the sector additional resilience to possible fluctuations in credit risks.
The loan portfolio, which increased by an average of 18% in 2021-2024, will expand at a high single-digit rate in 2026. The main reasons for the slowdown are limited opportunities in retail lending, increased indebtedness of the population and tightening of regulations in this area.
The report states that the share of problem loans (Stage 3) could increase to about 4.5% in 2026. This increase is associated with the expansion of consumer loans and the “maturation” of the portfolio. However, the healthy profitability and loss-absorbing capacity of banks will keep the possible deterioration in asset quality at a manageable level.
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