Baku: Azerbaijani banks hold a stable position among the banks in the South Caucasus region, according to Maxim Maliutin, Deputy Director for CIS+ and Middle Eastern Banks at Fitch Ratings. In an interview with APA-Economics, Maliutin highlighted the factors contributing to the stability of the Azerbaijani banking sector.

According to Azeri-Press News Agency, Maliutin noted that the viability ratings of most Caucasian banks have increased in recent years. In Georgia and Armenia, this improvement was largely influenced by post-pandemic economic recovery and significant deposit inflows from Russia as a result of the war in Ukraine. In contrast, Azerbaijani banks benefited from higher oil prices, reductions in legacy asset quality risks, and an improving regulatory framework, which contributed to positive rating actions.

Maksim Maliutin further explained that despite the improvements, all banks in the region remain below investment grade, with ratings ranging from B to BB. The region’s banks face key constraints, including sovereign rating limitations such as Armenia and Georgia both rated BB. Additionally, structural issues like high loan and funding dollarization, large balance sheet concentrations, and certain regulatory weaknesses compared to international standards present challenges for the banks’ ratings.