BAKU, Azerbaijan, Feb. 25. Profitability of Azerbaijani banks will remain stable, Trend reports via Moody’s.
The latest report by Moody’s reveals that the average net income to tangible assets ratio of the Azerbaijani banks we rate should remain solid at around 2%-3%, supported by robust net interest margins, solid fee and commission income, and contained loan-loss provisioning charges.
“Margins have grown in recent years, reflecting an increasing share of higher yielding loans to retail borrowers and small and medium sized enterprises, with the economic recovery driving strong loan demand from these segments. However, there may be margin pressure, as declining Central Bank of Azerbaijan policy rates decrease the rates on banks' interest-bearing assets while rates on their funding remain fairly rigid because of fierce competition for customers. Increased obligatory reserve requirements will somewhat constrain still strong profitability,” reads the report.
Moody’s rates five out of 22 commercial banks operating in Azerbaijan, which together accounted for around 56% of total system assets as of 31 December 2025.
According to the Central Bank of Azerbaijan, total assets of banks operating in the country stood at 57.086 billion manat as of December 31, 2025, with total liabilities at 49.744 billion manat and equity at 7.343 billion manat.
Over the course of 2025, total assets increased by 7.7%, liabilities rose 7.2%, and equity grew 11%.
In the reporting month, the banking sector’s loan portfolio expanded by 1.3% (377.5 million manat) to 30.063 billion manat. The portfolio breakdown was as follows:
Business loans: 53.6% (16.106 billion manat)
Consumer loans: 31.1% (9.354 billion manat)
Mortgage loans: 15.3% (4.603 billion manat)
For the full year, the loan portfolio grew 9.4% (2.585 billion manat), including increases of 1.319 billion manat for business loans, 909.3 million manat for consumer loans, and 357 million manat for mortgages.
Banks posted a net profit of 1.162 billion manat and an operating profit of 1.862 billion manat for 2025.