All three banks have Stable Outlooks. Fitch has also upgraded KB's Viability Rating (VR) to 'b' from 'b-'. A full list of rating actions is at the end of this commentary.

The rating actions reflect the stability of the broader economy and the sovereign credit profile to date; Azerbaijan is rated BBB-/Stable. In Fitch's view, the strong sovereign balance sheet and sizable State Oil Fund provide a significant cushion against the decline in oil prices. 

Despite lower oil revenues, the goverment's policy response is expected to be relatively modest, so that growth will continue to benefit from fiscal support in the form of high public capital expenditure. However, a prolonged period of low oil prices could ultimately result in significant reductions in budget spending, which has been

the major growth driver for the non-oil economy and supported bank lending and asset quality to date. 

Liquidity in the sector is adequate, underpinned by banks' reasonable deposit collection capacity and limited market wholesale funding (with the notable exception of IBA).