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S&P reveals risks related to Azerbaijan's state bank

17 December 2025 11:56 (UTC +04:00)

S&P Global Ratings has affirmed the long-term and short-term issuer credit ratings of Azer-Turk Bank OJSC (ATB) at “B+/B” and maintained a stable outlook, APA-Economics reports.

The decision is based on the expectation that the bank’s financial and business indicators will largely remain unchanged during the phase in which it is forming a new strategy following the acquisition of a 51% stake by SOCAR. SOCAR’s acquisition of a stake in ATB was finalized in October 2025 through corporate registry and charter amendments. Although a new management team has begun operations, the position of Chief Executive Officer (CEO) remains vacant.

S&P notes that ATB is currently developing a new strategy centered on transactional banking with SOCAR and lending to small and medium-sized enterprises in the non-oil sector. The agency will assess the strategy’s real impact on the bank’s future market position and profitability after it is announced.

According to the rating agency’s forecast, the bank’s capitalization and risk position are expected to remain largely stable over the next 12 months. The risk-adjusted capital (RAC) ratio is projected to be in the range of 6–7.5% in 2026 (6.6% at the end of 2024). This indicator will mainly depend on the growth rate of the loan portfolio and possible capital support.

S&P also notes that amid rapid credit growth in previous years, the share of non-performing loans may increase: “While the share of non-performing loans stood at 2.2% at the end of 2024, it rose to 3.2% by the end of September 2025 and could reach 4% over the next 12–24 months. The increase is mainly explained by a deterioration in quality across corporate and consumer loans.”

The agency considers ATB a non-strategic subsidiary for SOCAR, and therefore does not factor in additional support from SOCAR in the ratings. Against the backdrop of the government’s stake in the bank being reduced from 75% to 24%, the likelihood of state support is also assessed as low.

S&P warns that the ratings could be downgraded if the new strategy puts pressure on the bank’s capitalization and asset quality, or if SOCAR’s ownership does not translate into tangible business advantages. At the same time, the likelihood of a rating upgrade over the next 12 months is assessed as low.