BAKU, Azerbaijan, February 9. Credit figures of
banks in Armenia, Azerbaijan, and Georgia remain strong and exceed
historical average levels, Trend reports via the Fitch Ratings international
agency.
The sector is supported by sustainable economic growth,
improving sovereign credit profiles, and the ongoing indirect
effects of the conflict in Ukraine.
“From 2022 through September 2025, the banks of the region
demonstrated record profitability. The net interest margin
increased by one to two percentage points against the background of
the increase in interest rates. Armenian banks, to a lesser extent,
and Georgian banks received additional benefits due to the increase
in commission income related to transit trade, migration, and
payment flows from Russia. In Azerbaijan, the reduction of risks
related to problem assets of the past years contributed to the
increased profitability of banks.
Capital adequacy indicators remain high in Armenia and Georgia
thanks to strong profits and strict regulatory requirements. In
Azerbaijan, the rapid growth of lending and the payment of
dividends led to the reduction of capital buffers; however, Fitch
expects that the level of capitalization in 2026 will generally
remain stable. Sufficient profitability and moderate asset growth
will contribute to this,” the Fitch report said.
The report noted that the quality of assets in the region has
improved, although the further decrease in the share of problem
loans may be limited due to the already low level of such
assets.
“The most noticeable progress has been recorded in Azerbaijani
banks since 2021, which was facilitated by the transition to more
detailed lending in the national currency and the tightening of
requirements for the solvency of borrowers,” the report
explained.
The level of dollarization has decreased but remains high in
Georgia (42% of credits at the end of nine months of 2025) and
Armenia (34%).
The report highlighted that in Azerbaijan, the proportion of
foreign currency loans is notably low at 14%. This situation is
attributed to the manat’s direct linkage to the U.S. dollar and the
stringent regulations governing foreign currency lending.
“The liquidity of banks remains comfortable. However, by the end
of nine months of 2025, the average ratio of credits to deposits in
the sector exceeded 105% in Armenia and Georgia (for comparison: at
the end of 2022—82% and 101%, respectively) against the background
of the normalization of the inflow of deposits. In Azerbaijan, this
indicator was 80%.
The ratings of banks in the region vary from “B” to ‘BB+’. The
ratings of the largest banks in Georgia (BB/stable) and Armenia
(BB-/positive) correspond to the sovereign ratings of these
countries. Banks of Azerbaijan are rated below the sovereign level
(BBB-/stable), which reflects the agency’s assessment of their
independent financial profiles and operating environment
(bb-/stable). Strengthening regulation and stable financial
indicators can contribute to the improvement of the ratings of the
banks of Azerbaijan,” Fitch added.
