BAKU, Azerbaijan, October 13. The dollarization
rate of Azerbaijan's banking sector deposit portfolio fell by 1.6
percentage points in the first half of 2026 to 34%, while the
dollarization of the loan portfolio increased by 1.4 percentage
points to 15.6%.
This was stated in the Financial Stability Report published by
the Central Bank of Azerbaijan (CBA).
According to the report, despite changes in the dollarization
rates of deposit and loan portfolios, both indicators remain close
to historical lows.
Meanwhile, the banking sector's foreign currency position
remains in compliance with prudential requirements. In the first
half of 2026, the banking system's net open long foreign currency
position stood at 260 million manat ($152.9 million), while the
ratio of the total open foreign currency position to total capital
was 3.7%.
Under the current rules, the total open foreign currency
position in freely convertible currencies may range from minus 20%
to plus 20% of a bank's total capital. For individual currencies,
the limit ranges from minus 10% to plus 10%.
The report also addressed requirements for issuing consumer
loans in foreign currencies.
Under the CBA's current regulatory framework, consumer loans
denominated in foreign currencies may be issued only to borrowers
who earn income in the respective currency.
Such loans may also be granted to individuals without income in
the relevant foreign currency, subject to certain conditions. In
these cases, the loan must be secured by foreign currency deposits
held with the same bank or by other first-class collateral. The
value of the collateral must not exceed 90% of the loan amount.
In addition, banks are subject to an extra requirement for
risk-weighted assets (RWA) on business loans issued to borrowers
who have no income in the relevant foreign currency or have not
hedged their currency risk through other means. This requirement is
intended to ensure that banks have sufficient capital resources to
cover the risks arising from such loans.
