BAKU, Azerbaijan, October 13. Azerbaijan's banking sector total liquidity coverage ratio (LCR) increased by 6 percentage points in the first half of 2026 compared with the end of last year, reaching 160%. The ratio in local currency rose by 11 percentage points to 138%.
This was stated in the Financial Stability Report published by the Central Bank of Azerbaijan (CBA).
According to the report, as of the end of June 2026, all banks exceeded the minimum regulatory requirements for both the total LCR and the ratio in local currency. At that date, the minimum requirement for the total LCR was 100%, while the minimum requirement for the local-currency ratio was 80% for systemically important banks and 70% for other banks.
Compared with the end of 2025, the banking sector's high-quality liquid assets increased by 13%, or 1.9 billion manat ($1.17 billion) reaching 17 billion manat ($9.9 billion). The sector's net cash outflows rose by 9%, or 908 million manat ($534.11 million), to 10.6 billion manat ($6.23 billion).
The report noted that the increase in banks' liquidity ratios was primarily driven by growth in high-quality liquid assets. Overnight deposits and funds placed with the Central Bank through repo operations were the main contributors to this increase.
“Banks have already adapted to the new regulatory requirement related to the LCR,” the report stated.
According to the report, the CBA introduced a new minimum requirement for the local-currency LCR, with a phased increase scheduled from August 1, 2025, through December 1, 2027. The requirement is intended to strengthen banks' ability to meet short-term liquidity needs in local currency and enhance the resilience of the financial system.
Under the new regulation, the minimum requirement was set at 50% for systemically important banks and 40% for other banks from August 1, 2025. From December 1, 2027, the ratio is scheduled to reach 100% for all banks. As of the end of June 2026, the minimum requirement stood at 80% for systemically important banks and 70% for other banks.
The report emphasized that the main objectives of the new requirement are to improve banks' ability to meet short-term liquidity needs, ensure they maintain sufficient high-quality liquid assets during periods of stress, prevent liquidity crises and strengthen financial stability.
Growth was also recorded in banks' high-quality liquid assets in both local and foreign currencies. According to the report, more effective management of liquid funds contributed to the increase in such assets in local currency, while growth in interbank overnight deposits drove the increase in high-quality liquid assets in foreign currency.
The report also noted that amendments to the Regulation on Liquidity Risk Management in Banks in 2025 expanded the range of assets classified as high-quality liquid assets.
Under the amendments, funds placed with the Central Bank through repo operations, deposits placed with the CBA for up to 30 days, and overnight deposits held with the Central Bank and other banks were classified as high-quality liquid assets.