Azerbaijan’s Central Bank introduces additional countercyclical capital buffer for banks

Starting this month, the Central Bank of Azerbaijan (CBA) will implement an additional 0.5% countercyclical capital buffer on the total and Tier 1 capital of local banks.

According to Report, the decision to activate this buffer was primarily driven by the credit "gap" exceeding 2%.

Moreover, the rapid credit growth, strong profitability, and financial stability of banks were key factors in the move to introduce the buffer.

As of the end of last November, the annual loan portfolio growth reached 19.6%, nearly twice the growth rate of nominal non-oil GDP. Among the 22 banks in the country, 19 saw an increase in their loan portfolios, with 14 of them experiencing growth surpassing that of the non-oil GDP.