Azerbaijan.US
Non-performing loans (NPLs) in Azerbaijan have increased over the past year, though the overall level remains within internationally accepted prudential thresholds, according to data from the Central Bank of Azerbaijan.
As of the end of November 2025, overdue loans totaled 557.6 million manats, reflecting a 2.1% increase since early November, a 24.2% rise since the start of the year, and 12.3% growth year-on-year.
The share of NPLs in the total loan portfolio reached 1.8%, up slightly from 1.7% recorded in October and in November 2024.
From a regulatory perspective, this level remains manageable. International practice generally considers NPL ratios below 3% to be within tolerance, while ratios between 3% and 5% prompt closer supervisory attention. Levels above 5% are typically associated with heightened systemic risk and require corrective policy action.
A key mitigating factor is Azerbaijan’s conservative macroprudential framework. Current regulations cap borrowers’ monthly debt servicing obligations at 45% of income, one of the strictest debt-to-income limits in the region. In addition, since mid-2025, total credit exposure – including loan balances and credit card limits – has been capped at five times officially declared income.
Economists note that these measures significantly reduce the likelihood of rapid asset quality deterioration, even amid rising household costs and economic pressures. At the same time, the upward trend in overdue loans suggests the importance of continued monitoring and stress testing, particularly if macroeconomic conditions tighten.
Overall, while the trajectory merits attention, Azerbaijan’s credit sector remains prudentially contained, with regulatory buffers in place to address potential risks.
