Azerbaijan’s banking sector shows resilience in the face of difficult economic conditions

Since June 1 this year, Azerbaijan’s banking sector has shown good performance, highlighted by significant growth in both assets and loans amid changing economic conditions.

The total assets of Azerbaijan’s banking sector reached 49.1475 billion manats, a significant increase of 7% compared to the previous year. This growth highlights the sector’s resilience and ability to thrive despite external challenges.

A key indicator of the sector’s health, net lending to customers amounted to 23.7199 billion manat, reflecting a significant increase of 22.1% year-on-year. This expansion raised the share of loans in the balance sheet total from 42.3% to 48.3%, indicating an increasing focus on lending to stimulate economic activity.

Banking sector liabilities increased by 6.8% to 42.8178 billion manats. Particularly noteworthy is the deposit portfolio, which increased by 6.6% to 34.8352 billion manats. This growth was boosted by a 10.3% increase in individual deposits, which amounted to 13.3995 billion manat, and a 4.4% increase in corporate deposits, which amounted to 21.4357 billion manat. This increase in deposits underlined the growing confidence of both individuals and businesses in the banking system.

The sector’s capital also saw a significant increase of 8.4%, reaching 6.3297 billion manat. This capital increase provides a buffer against risk and supports the sector’s ability to expand lending while maintaining stability.

It is worth noting that banks’ liabilities to the Central Bank of Azerbaijan decreased significantly over the last year, by 2.3 times, and amounted to 47.1 million manats. This decline indicates better liquidity management and reduced dependence on central bank financing, reflecting the improved financial health of the sector.

The Azerbaijani banking sector has demonstrated resilience and growth in a challenging economic environment. The significant growth in assets, loans and deposits illustrates a solid performance trajectory, supported by prudent management practices and growing confidence of both individual and corporate depositors. Further progress and maintaining this momentum will be crucial, ensuring continued stability and contribution to Azerbaijan’s economic development.

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