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Moody's: Azerbaijani banking sector enters 2026 with stable and positive indicators

05 December 2025 19:13 (UTC +04:00)

Moody’s international rating agency has reaffirmed its positive outlook for Azerbaijan’s banking sector, APA-Economics reports, citing agency.

It stated that the level of problem loans in the country remains at historically low levels, and this trend is supported by strict prudential regulation.
According to the report, asset quality will remain stable, as economic conditions continue to be favorable. Risk management for the sector’s loan portfolio is being strengthened, and stricter requirements are being applied for the recognition of problematic assets and the creation of provisions. Moody’s emphasizes that this approach is one of the main factors enhancing the resilience of banks.

The agency also noted that capital adequacy indicators will further improve in the next period. As a result of strong profitability, internal capital generation, and the tightening of prudential requirements, Azerbaijani banks will have the capacity to absorb higher losses.
According to Moody’s forecast, liquidity will also remain sufficiently strong. Although loan growth will relatively outpace deposit growth, liquidity in the sector will remain at a fully adequate level. The large market share of state-owned banks and the high readiness for state support are also cited as factors keeping the sector’s overall risk profile low.

The agency states that the strengthening of Azerbaijan’s fiscal position also increases the potential for government support to the banking sector: “The rise in fiscal resilience expands the government’s ability to support banks.”