Fitch: Strong Earnings Support Azerbaijan’s Bank Capital Despite Dividend Payouts

Azerbaijan’s banking sector is poised to maintain stable capitalization in 2026, supported by high profitability and moderate asset growth, according to a new report from Fitch Ratings. While rapid lending growth and increased dividend payouts have led to a decline in capital buffers, the agency expects the sector's financial strength to remain resilient.

Fitch notes that credit performance across Azerbaijan, Armenia, and Georgia remains above historical norms, bolstered by robust economic growth and improved sovereign credit profiles. In Azerbaijan, profitability has been specifically supported by a reduction in risks associated with legacy non-performing assets.

The report highlights significant improvements in asset quality in Azerbaijan since 2021, driven by a shift toward local-currency lending and stricter borrower solvency requirements. Furthermore, Azerbaijan maintains the lowest dollarization rate in the region, with foreign-currency loans accounting for only 14% of the total, compared to 42% in Georgia and 34% in Armenia.