BankingBrief
Azerbaijan amends three bank credit-risk regulations, effective 9 November
The changes cover asset classification, provisioning and consumer-lending guarantees; consumer loans have the highest non-performing ratio of three segments, at 3.79%.
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The Central Bank of the Republic of Azerbaijan has approved amendments to three regulations governing credit risk, asset classification and risk management at banks, and they enter into force on 9 November, according to its 13 October announcement. The central bank's Management Board approved them under Resolution No. 39/3 on 15 September.
What changes
The amendments cover the regulation on asset classification and specific loan-loss reserves, the regulation on prudential ratios and requirements related to credit risks, including large exposures, and the regulation on credit risk management in banks, the central bank said. It said the aim is to improve assessments of borrowers' ability to repay and to align prudential requirements more closely with the risks involved. The changes refine the requirements for lending decisions based on behavioural models and the provisioning for such loans, allow a more comprehensive consideration of risk in asset classification, and improve how information on the credit obligations of individuals engaged in buying and selling goods on credit is assessed. Requirements for guarantees in consumer lending have also been revised. The announcement gives no figures for provisioning rates or ratios.
The consumer-credit backdrop
Consumer loans have the highest non-performing ratio of the three main segments. Banks' consumer loans stood at AZN 10.26 billion at the end of August, and the non-performing ratio on them was 3.79 per cent, against 3.26 per cent at the end of 2025, 2.91 per cent for business loans and 0.84 per cent for mortgages, according to central bank data. Non-performing consumer loans rose to AZN 388.8 million from AZN 304.6 million. For the whole system the ratio was 2.88 per cent, against 2.54 per cent at the end of 2025, with a loan portfolio of AZN 32.82 billion that had grown 9.2 per cent in eight months, a Data Desk calculation. The central bank counts a loan as non-performing when the principal is more than 90 days in arrears on principal or interest.
A separate resolution dated the same day, No. 39/5, set new payment-system fees, which the central bank announced on 14 October. Maximum fees for the real-time gross settlement system, AZIPS, and the low value payments clearing and settlement system were cut by half and one-third respectively, and fixed fees based on transaction-value bands will apply. The new fees take effect on 1 April 2027.