S&P has downgraded the sectoral risk component rating for Azerbaijan's banking sector within the framework of the Banking Sector Country Risk Assessment (BICRA), reducing it from level 8 to level 7, AzerNEWS reports.
According to the Central Bank of Azerbaijan, this reflects a decrease in the country's banking sector risk. The change is due to the Central Bank's initiatives to modernize the regulation and supervision of the banking sector over the past three years.
The economic risk component was maintained at level 8, and the forecast was revised from "stable" to "positive".
S&P emphasized that in the past period, the Central Bank updated corporate governance standards within the framework of the "Financial Sector Development Strategy for 2024-2026", brought liquidity risk management rules and the bank capital structure into line with Basel III requirements, and improved other regulations.
The agency predicts that in 2026, the quality of banks' assets will remain stable and the loan portfolio growth rate will be in the range of 10-12 percent. S&P emphasized that Azerbaijani banks have the lowest level of loan dollarization among the countries of the region.
