BAKU, Azerbaijan, October 15. Azerbaijan's
banking sector loan portfolio grew by 11.8% year-on-year in the
first half of 2026, outpacing nominal GDP growth of 6.4%, Atakhan
Hasanov, director of the CBA's Financial Stability Department, said
at a press conference presenting the Financial Stability Report,
Trend's correspondent
reports from the event.


He said the faster growth in lending compared with GDP indicated
that the banking sector was playing an expanding role in financing
the economy.


"During the first six months of this year, the loan portfolio
grew across all segments, including business, consumer and mortgage
lending," Hasanov said.


According to him, the increase in consumer lending was driven
mainly by lending to groups with lower debt burdens, a positive
trend from the perspective of monitoring household
indebtedness.


"As a result of the macroeconomic policies implemented in our
country, consumer lending has mainly grown among individuals with a
low debt burden, meaning those whose debt-service-to-income ratio
is below 45%. Consequently, the share of the loan portfolio with a
debt-service-to-income ratio above 45% fell to 27%, from 38% in the
same period last year. The Central Bank closely monitors household
borrowing trends and will continue to do so," he said.


Hasanov also addressed the banking sector's financial
resilience, noting that its total capital adequacy ratio had
increased by 6 percentage points to 16%. He attributed the
improvement mainly to growth in capital, including capital
buffers.


He added that the implementation of a new regulatory framework
governing funds raised by banks in the national currency was
continuing, with banks currently complying with the relevant
requirements. The framework is intended to strengthen the sector's
financial resilience.


The CBA is also assessing maturity mismatches between banks'
assets and liabilities, Hasanov said. During the reporting period,
the share of assets with maturities of less than one year rose by 1
percentage point to 52% of total assets. The corresponding share of
liabilities remained unchanged at 51%. "Our analysis shows that
banks' exposure to interest rate risk is currently low," he
added.


Hasanov also discussed dollarization trends. He said the share
of foreign-currency lending had declined in the loan portfolios of
both individuals and legal entities, with both segments reaching
their lowest levels.


He attributed the trend to exchange-rate stability and the
existing macroeconomic framework. However, dollarization across the
overall loan portfolio had increased somewhat, mainly due to
secured business lending.


The department director said the CBA had expanded its analysis
of the financial performance of the non-financial sector in its
Financial Stability Report since last year. Since a significant
share of banks' major borrowers operate in the non-financial
sector, assessing their financial position is important for
financial stability, he explained.


"The banking sector continues to finance various areas of the
economy. As of July 1, 2026, banks' business loan portfolio had
increased by 13.4%, or 2 billion manat ($1.17 billion),
year-on-year to 17.2 billion manat ($10.11 billion)," Hasanov
said.







He added that business lending growth was mainly recorded in
construction, information technology and digital technology.


According to the department director, analysis across different
economic sectors shows varying levels of resilience. However, no
individual sector of the economy is currently considered risky as a
whole.


Hasanov noted that the banking sector remained highly profitable
despite increases in interest and non-interest expenses.


"In the first half of 2026, the banking sector earned nearly 700
million manat ($411.7 million) in profit. The return on assets
(ROA) stood at 2.5%, while the return on equity (ROE) was 28.7%.
These indicators are considered high when compared with various
international benchmarks," he said.


Hasanov said that, under the Financial Sector Development
Strategy for 2024-2026, the CBA was implementing measures to
improve its regulatory and supervisory mechanisms.


According to him, the risk-based supervisory framework for the
banking sector began to be implemented in the first half of 2026.
Rules governing bank stress tests were also approved, and the CBA
made corresponding changes to its diagnostic assessment
mechanisms.


He emphasized that protecting financial consumers' rights was
another key priority for the Central Bank. To this end,
methodological guidance on market conduct at financial institutions
was adopted this year.


"From October 1, 2026, banks and payment institutions began
implementing a mechanism allowing individuals to prohibit the
issuance of loans in their name remotely. A waiting period has also
been introduced for remotely issued loans. Depending on the loan
amount, this period is either one hour or 24 hours," Hasanov
said.


He added that measures were also being taken to improve
corporate governance standards at banks, including plans to
establish dedicated functions to handle customer complaints more
effectively.


Hasanov noted that improving the knowledge, skills and
professional competence of specialists working in financial
institutions was also among the CBA's regulatory and supervisory
priorities.