Azerbaijan's banking sector shows resilience amidst challenging economic conditions

As of June 1 this year, Azerbaijan's banking sector has demonstrated robust performance, highlighted by significant increases in both assets and loans amidst evolving economic conditions.

The total assets of Azerbaijan's banking sector reached 49.1475 billion manats, marking a notable 7% rise compared to the previous year. This growth underscores the sector's resilience and ability to expand despite external challenges.

A pivotal indicator of the sector's health, net loans to customers accounted for 23.7199 billion manats, reflecting a substantial 22.1% increase year-over-year. This expansion elevated the share of loans in total assets from 42.3% to 48.3%, indicating a growing focus on extending credit to stimulate economic activity.

The liabilities of the banking sector increased by 6.8% to 42.8178 billion manats. Of particular note is the deposit portfolio, which rose by 6.6% to 34.8352 billion manats. This growth was bolstered by a 10.3% increase in individual deposits, totaling 13.3995 billion manats, and a 4.4% rise in corporate deposits, amounting to 21.4357 billion manats. Such increases in deposits underscored growing confidence among both individuals and businesses in the banking system.

The sector's capital also saw a healthy increase of 8.4%, reaching 6.3297 billion manats. This capital growth provides a buffer against risks and supports the sector's capacity to expand lending activities while maintaining stability.

Notably, the liabilities of banks to the Central Bank of Azerbaijan decreased significantly by 2.3 times over the past year, amounting to 47.1 million manats. This reduction indicates improved liquidity management and reduced reliance on central bank funding, reflecting enhanced financial health within the sector.

Azerbaijan's banking sector has demonstrated resilience and growth amidst challenging economic conditions. The significant increases in assets, loans, and deposits illustrate a robust performance trajectory, supported by prudent management practices and growing confidence from both individual and corporate depositors. Moving forward, sustaining this momentum will be crucial, ensuring continued stability and contribution to Azerbaijan's economic development.