Central Bank of the Republic of Azerbaijan prepares banks for parallel IFRS 9 and prudential asset classification and provisioning from 2026

The Central Bank of the Republic of Azerbaijan held meetings with bank specialists on the requirements of its Methodological Guidance for applying International Financial Reporting Standard 9 (IFRS 9) to asset classification and provisioning, following the Central Bank Board’s approval of the guidance in December 2025. From 2026, banks will classify assets and create provisions in parallel under both IFRS 9 and existing prudential requirements. The guidance provides a single approach for classifying bank assets for prudential supervision purposes in line with IFRS 9 and for calculating related reserves. The Central Bank framed the measure as an initial step in integrating IFRS into prudential regulation and reporting under the 2024–2026 Financial Sector Development Strategy, and used the meetings to provide methodological support and address practical implementation questions for teams responsible for IFRS 9 reporting.