International rating agency Fitch Ratings has upgraded its assessment of the operating environment for Azerbaijani banks to “bb” from the previous “bb-”, while maintaining a “stable” outlook, AzerNEWS reports.

According to Fitch, the revision reflects strengthened regulatory oversight and further progress in implementing a risk-based banking supervision framework. The agency said these developments should improve the banking sector’s resilience to cyclical pressures.

Fitch analysts also took into account Azerbaijan’s stable credit profile and continued government support for macroeconomic stability when revising the assessment.

“The revision narrows the gap between the assessment of the banking sector’s operating environment and Azerbaijan’s sovereign rating of ‘BBB-/Stable’,” Fitch said.

Despite cyclical fluctuations inherent in Azerbaijan’s economy, Fitch expects the financial profile of the country’s banking sector to remain resilient in 2026–2027.

The upgrade in the operating environment assessment therefore reflects the strengthening of Azerbaijan’s regulatory framework and supervisory mechanisms, as well as the country’s continued macroeconomic stability.

Fitch’s revised assessment signals a more favorable environment for Azerbaijani banks, particularly as stronger supervision and risk-based regulation are expected to enhance the sector’s ability to withstand economic and financial shocks.