(MENAFN- Trend News Agency) BAKU, Azerbaijan, December 5. Azerbaijani manat's currency's stability has improved the quality of foreign-currency loans, Trend reports via Moody's.

Moody's says in its latest report that as of September 2025, Azerbaijan's banking system assets were equivalent to 44% of GDP, indicating that the country remains relatively underbanked. Total loans accounted for roughly 23% of GDP, or 37% of non-oil GDP, as of that date.

“Systemwide loan growth was 19% in 2024 and 18% in 2023, driven by robust credit demand and supply as the economy expanded following the pandemic-related contraction in previous years. In the first nine months of 2025, total loans increased by 7% compared with year-end 2024,” the report says.

Moody's analysts note that after a significant decrease over 2020-2023, problem loans remained broadly stable at a historical low of around 3% of total loans as of year-end 2024, while the problem loan coverage by reserves was around 112%.

“Asset quality will be supported by favorable economic conditions because of the robust performance of the non-oil economic sectors, which strengthened many borrowers' debt repayment capacity. The stability of the manat has improved the quality of foreign-currency loans, with their share decreasing to 14% of total loans by September 2025, from roughly 16% in 2024 and a peak of 30% at the end of 2020.”

MENAFN05122025000187011040ID1110440996