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Akbar Novruz

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The Central Bank of Azerbaijan (CBA) has held discussions with representatives of international credit rating agency S&P Global Ratings on the country's banking sector, financial stability and ongoing regulatory reforms.

According to a statement issued by the CBA, the meeting brought together representatives of S&P Global Ratings responsible for financial services and sovereign credit ratings.

The discussions focused on developments in Azerbaijan's banking system, measures aimed at strengthening prudential regulation, risk-based supervision and bank resolution mechanisms, as well as priorities for the Central Bank's next strategic period.

"The meeting discussed the current situation and observed development trends in the banking sector of Azerbaijan, measures taken by the Central Bank to improve prudential regulation, risk-based supervision and resolution frameworks, financial stability issues, as well as initiatives planned for the next strategic period. In addition, the macroeconomic situation in the country, the impact of events in the region on the country's economy, and issues related to the transmission mechanism of monetary policy were also in the spotlight," the CBA stated.

The meeting also addressed Azerbaijan's broader macroeconomic environment, the potential implications of regional developments for the domestic economy and the effectiveness of monetary policy transmission.

Previously, S&P Global Ratings positively assessed the regulatory reforms implemented by the Central Bank over the past four years, highlighting improvements in banking supervision and financial sector governance.

In its assessment, the agency noted that Azerbaijan's banking system maintained stability throughout 2024 and 2025, supported by regulatory measures aimed at strengthening the sector's resilience.

These included improvements to corporate governance standards, the introduction of liquidity management requirements aligned with Basel III principles, new operational and market risk management regulations, and stricter prudential reporting requirements for banks.

S&P also highlighted the Central Bank's decision in March 2025 to activate a 0.5% countercyclical capital buffer, a measure intended to mitigate systemic risks associated with rapid credit expansion.

The agency identified several areas for further regulatory development, including the implementation of a risk-based supervisory model, the transition to International Financial Reporting Standard 9 (IFRS 9) and the strengthening of banking sector stress-testing frameworks.