Azerbaijan Banking Earnings Season: Oil Tailwinds, De-Risked Books, and a 15.6% Dividend Yield

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10VC
Jun 01, 2026

Macro Tailwinds: Backed by an upgraded Brent forecast of $93/bbl for 2026, the current account is tracking toward a massive 9–10% GDP surplus. Concurrently, the consolidated budget surplus is projected to reach a strong 4.0–4.5% of GDP, further boosting corporate liquidity and sovereign buffers.
PASHA Bank (PB): While net interest margin compression brought FY25 net income to AZN 184m, robust provision recoveries demonstrated strong credit quality. The bank is now optimally positioned for 10-15% loan growth and NIM expansion to ~6.9% in 2026.
ABB Bank (ABB): FY25 Net Income rose 12% YoY to AZN 404m, powered by a 299bp normalization in the cost of risk and a near-doubling of net fee income. The bank announced an AZN 200m dividend, translating to a 15.6% yield at the current share price.
Strategic Growth: ABB’s strategic acquisition of Davr Bank adds immediate retail scale to anchor its projected 15% annual loan growth trajectory.
Valuation Gap: Both banks trade at steep discounts to regional peers. ABB is exceptionally cheap at just 0.46x P/B against a 16.5% ROAE (with 101.6% upside to target), while PASHA offers a highly transparent, well-capitalised franchise with a strong ~19.5% ROAE profile.

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