Azernews.Az

Qabil Ashirov

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International credit rating agency Moody’s Ratings has said that Azerbaijani banks have sufficient capital and liquidity buffers to support an expansion of lending.

According to the rating agency, liquid assets accounted for 37.4% of Azerbaijan’s total banking assets at the end of 2025.

The corresponding figures stood at 37.5% in Kazakhstan, 35.3% in Armenia, 32.1% in Uzbekistan and 25.7% in Georgia. Azerbaijan ranked second among the five countries compared in terms of the share of liquid assets in total banking assets, narrowly trailing Kazakhstan.

Moody’s data also showed that the ratio of tangible common equity to risk-weighted assets in Azerbaijan’s banking sector stood at 19.2%.

The corresponding ratio was 20.4% in Kazakhstan, 17.9% in Armenia, 17.1% in Georgia and 13.9% in Uzbekistan. Azerbaijan again ranked second among the countries surveyed, behind Kazakhstan.

The rating agency emphasised that banking sectors across Central Asia and the Caucasus have strong buffers to absorb potential losses.

According to Moody’s assessment, existing capital and liquidity reserves across the region’s banking systems are sufficient to support further lending growth.

However, the report also highlighted structural challenges in banks’ funding profiles, noting that funding sources across the region tend to be relatively short-term and expensive.

In Azerbaijan, short-term funding accounted for 95% of total banking sector funding at the end of 2025, underscoring the sector’s reliance on shorter-maturity financing.

While strong capital and liquidity positions provide Azerbaijani banks with capacity to expand lending, the maturity and cost of their funding remain important factors influencing their ability to sustain credit growth.