AZE.US
Several Azerbaijani banks reported weaker financial results in the first half of 2026, including lower profits, declining revenues and shrinking deposit portfolios. However, economists say this does not mean borrowing costs will fall.
Bank VTB Azerbaijan posted a net profit of 5.826 million manats in January through June, down from 6.319 million manats during the same period last year.
The bank’s total revenue fell 8.1 percent to 26.053 million manats, while expenses declined 4 percent to 21.393 million manats.
As of July 1, the bank’s total assets stood at 336.851 million manats, down 0.1 percent year over year.
At the same time, its net loan portfolio increased 19.8 percent to 247.35 million manats.
The bank’s liabilities fell 3.7 percent to 220.669 million manats, while deposits declined 13.3 percent to 121.778 million manats. Its balance-sheet capital rose 7.7 percent to 116.164 million manats.
AFB Bank reported a much sharper drop in earnings. The bank ended the first half of the year with a profit of 237,000 manats, 11.5 times lower than during the same period in 2025.
AccessBank also recorded a significant decline in corporate deposits.
Deposits held by legal entities fell from 239.194 million manats at the end of 2025 to 190.615 million manats as of June 30, 2026.
That represents a six-month decrease of 48.579 million manats, or 20.3 percent. Compared with the same period last year, corporate deposits were down 18 percent.
Lower Profits Do Not Mean Lower Interest Rates
Economist Rashad Hasanov said weaker bank earnings are not a direct factor that would lead to lower lending rates or easier loan conditions.
According to him, the decline in some financial indicators is largely technical and is not caused by shrinking loan portfolios.
In fact, bank lending continues to expand, even as profits come under pressure.
Hasanov said this could be explained by higher operating costs, changes in mandatory reserve requirements and the rising cost of funds attracted by banks.
When banks have to pay more to raise money, they have less room to reduce the interest rates charged to borrowers.
High inflation and uncertainty over the medium-term economic outlook also make lower lending rates less likely.
As banks expand their loan portfolios, they may also take on more higher-risk clients. This forces financial institutions to set aside larger reserves, increasing the cost of lending.
“I do not think these factors will lead to lower lending rates under the current conditions. At least in the short term, I do not expect that,” Hasanov said.
Despite weaker profits and falling deposits at some banks, there are currently few signs that loans in Azerbaijan will become cheaper anytime soon.
AZE.US