In Azerbaijan, 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, Report informs referring to Fitch Ratings.
Banks' credit metrics in Armenia, Azerbaijan and Georgia are strong and remain above historical norms, Fitch Ratings says: "Strong economic growth, improved sovereign credit profiles and continued spillovers from the conflict in Ukraine have supported performance.
The banks posted record profitability in 2022–9M25. Net interest margins rose by 1pp–2pp on higher rates. Armenian banks and, to a lesser extent, Georgian banks gained from higher fee income linked to transit trade, immigration and payment flows from Russia. Easing legacy asset-quality risks supported Azerbaijani banks' profitability."
"Capital ratios are solid in Armenia and Georgia, driven by strong earnings and high regulatory requirements. Asset quality has improved across the region, but further reductions in impaired loans may be limited given already low levels. Azerbaijani banks have had the most pronounced improvement since 2021, aided by a shift to granular local-currency lending and tighter affordability criteria.
Dollarisation has declined but remains high in Georgia (42% of loans at end-9M25) and Armenia (34%). 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.
Liquidity remains comfortable. However, sector-average loans/deposits ratios exceeded 105% in Armenia and Georgia by end-9M25 (end-2022: 82% and 101%, respectively) as deposit inflows normalised. Azerbaijan's ratio was 80%.
Bank ratings range from ‘B' to ‘BB+.' The ratings of the largest banks in Georgia (BB/Stable) and Armenia (BB-/Positive) are aligned with the respective sovereign ratings. 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," the agency noted.