BAKU, Azerbaijan, October 13. Azerbaijan's
banking sector total liquidity coverage ratio (LCR) increased by 6
percentage points in the first half of 2026 compared with the end
of last year, reaching 160%. The ratio in local currency rose by 11
percentage points to 138%.


This was stated in the Financial Stability Report published by
the Central Bank of Azerbaijan (CBA).


According to the report, as of the end of June 2026, all banks
exceeded the minimum regulatory requirements for both the total LCR
and the ratio in local currency. At that date, the minimum
requirement for the total LCR was 100%, while the minimum
requirement for the local-currency ratio was 80% for systemically
important banks and 70% for other banks.


Compared with the end of 2025, the banking sector's high-quality
liquid assets increased by 13%, or 1.9 billion manat ($1.17
billion) reaching 17 billion manat ($9.9 billion). The sector's net
cash outflows rose by 9%, or 908 million manat ($534.11 million),
to 10.6 billion manat ($6.23 billion).


The report noted that the increase in banks' liquidity ratios
was primarily driven by growth in high-quality liquid assets.
Overnight deposits and funds placed with the Central Bank through
repo operations were the main contributors to this increase.


“Banks have already adapted to the new regulatory requirement
related to the LCR,” the report stated.


According to the report, the CBA introduced a new minimum
requirement for the local-currency LCR, with a phased increase
scheduled from August 1, 2025, through December 1, 2027. The
requirement is intended to strengthen banks' ability to meet
short-term liquidity needs in local currency and enhance the
resilience of the financial system.







Under the new regulation, the minimum requirement was set at 50%
for systemically important banks and 40% for other banks from
August 1, 2025. From December 1, 2027, the ratio is scheduled to
reach 100% for all banks. As of the end of June 2026, the minimum
requirement stood at 80% for systemically important banks and 70%
for other banks.


The report emphasized that the main objectives of the new
requirement are to improve banks' ability to meet short-term
liquidity needs, ensure they maintain sufficient high-quality
liquid assets during periods of stress, prevent liquidity crises
and strengthen financial stability.


Growth was also recorded in banks' high-quality liquid assets in
both local and foreign currencies. According to the report, more
effective management of liquid funds contributed to the increase in
such assets in local currency, while growth in interbank overnight
deposits drove the increase in high-quality liquid assets in
foreign currency.


The report also noted that amendments to the Regulation on
Liquidity Risk Management in Banks in 2025 expanded the range of
assets classified as high-quality liquid assets.


Under the amendments, funds placed with the Central Bank through
repo operations, deposits placed with the CBA for up to 30 days,
and overnight deposits held with the Central Bank and other banks
were classified as high-quality liquid assets.