Azerbaijan banks to remain resilient in 2026: S&P
Banks operating in Azerbaijan and several neighboring countries are expected to maintain strong financial stability in 2026, continuing the resilience seen over the past two years.
The agency forecasts that banks in Azerbaijan, Georgia, Armenia, Kazakhstan, Kyrgyzstan, and Uzbekistan will preserve solid operating conditions next year. S&P notes that average lending growth across the region is likely to remain in the 15–20% range, while asset quality, profitability, and capital levels are expected to stay stable — key factors supporting the strength of the banking sector, News.Az reports, citing S&P Global Ratings.
S&P highlights that favorable economic growth prospects will continue to drive high demand for loans, particularly in the retail segment. At the same time, strong funding and liquidity positions, along with healthy profitability and stable capital buffers, are expected to help banks maintain credit quality throughout 2026.
The agency also reported that 19% of financial institutions in the region currently carry a “positive” rating outlook, while the remaining 81% have a “stable” outlook, reflecting confidence in the sector’s overall trajectory.
However, S&P warns of several emerging risks. Rising geopolitical tensions remain a key external threat, while rapid growth in retail lending could create potential imbalances if not carefully managed. The agency also points to new risk factors linked to digital transformation, artificial intelligence, climate-related challenges, and cybersecurity threats.
Additionally, while progress has been made in regulation, supervision, and corporate governance, S&P notes that transparency and predictability in these areas still lag behind more developed financial markets.
Overall, S&P concludes that Azerbaijan’s banking sector is well-positioned to sustain stability in 2026, supported by economic growth, sound financial fundamentals, and improving institutional frameworks — even as new global and technological risks reshape the financial landscape.
By Aysel Mammadzada
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