BAKU, Azerbaijan - A continued rise in overdue loans could push Azerbaijani banks to apply stricter borrower checks, set aside larger reserves and slow any reduction in lending rates, banking experts said.
Overdue loans reached 721.8 million manats ($424.6 million) as of September 1, up 37.6% since the start of 2026, according to Central Bank data discussed in a Baku TV report and summarized by Vesti Baku.
The increase was much faster than the 9.2% growth in the overall loan portfolio since the beginning of the year. AZE.US reported the underlying September 1 figures on September 25; the new report focuses on what the trend could mean for bank customers.
Borrower Checks Could Become Stricter
Banking expert Eyub Kerimli said further growth in delayed payments could require banks to increase provisions for possible losses and tighten lending standards. Potential borrowers could face closer reviews of income and their ability to service debt.
Higher risk may also make banks more cautious about reducing interest rates. Kerimli cautioned, however, that charging more does not by itself solve the problem: excessively expensive credit can weaken a borrower’s ability to repay and create additional delays.
Economist Natig Jafarli said the near-monthly increase in problem loans was becoming a serious trend. He described a problem-loan share above 3% as a warning benchmark, though that was his assessment rather than a universal crisis threshold established in the report.
Portfolio Reaches 32.8 Billion Manats
The 21 operating banks held a combined loan portfolio of 32.8242 billion manats as of September 1. Business loans accounted for 54.3%, consumer loans 31.3% and mortgages 14.4%.
The report put overdue debt at 2.1% of the portfolio, compared with 1.7% a year earlier. Dividing the cited overdue balance by the total portfolio produces a figure of about 2.2%; the report did not explain the difference, which may reflect rounding or classification.
Separate reporting based on Central Bank data showed overdue loans were 36% higher than a year earlier but fell 1.7% in August. The figures indicate worsening loan quality over the longer period despite the month-to-month decline.
Sources: Vesti Baku, Baku TV, the Central Bank of Azerbaijan and Report.az.