Recently, S&P Global Ratings affirmed the ratings of Azerbaijani banks at "BB-" and upgraded its assessment of the country's banking sector to "positive."

According to S&P, Azerbaijan's banking sector has benefited from favorable macroeconomic conditions, supported by high commodity prices that have stimulated credit demand and improved asset quality. The agency noted that credit growth in Azerbaijan is closely linked to oil prices and GDP growth. "Loans increased by about 20% in 2024, driven by both retail and corporate loans. We expect that infrastructure investments and a decline in a key policy rate could result in double-digit lending growth over 2025-2026. Additionally, we estimate that inflation-adjusted property prices rose 10%-15% last year, to be followed by our expectation of high single-digit growth in 2025. Banks’ modest exposure to the construction industry (about 5% of total loans at end-2024) and mortgages (15% at the same date) somewhat mitigate the risk," the report stated.

S&P highlighted recent regulatory reforms, including a new corporate governance standard for banks, restrictions on related-party transactions, and a liquidity risk management framework aligned with Basel III requirements. "In 2025-2026, the regulators' plan includes transitioning to risk-based supervision, revising the capital adequacy framework to align it with Basel III requirements, and strengthening requirements for banks’ stress testing. If these initiatives are implemented effectively, we think they could further strengthen regulation and supervision for banks in Azerbaijan," the report added.