As the economy recovered from the worldwide shock of the COVID-19 epidemic, Azerbaijan's banking industry continued to improve last year, reporting a profit after more than a year of losses.

According to central bank data, lenders recorded a 7.2% year-on-year increase in overall net profit of 317.5 million euros in 2021.

The banking sector's operational profit climbed by 17.3% year on year to 470 million euros, total assets expanded by 20% to 20 billion euros, and total liabilities jumped by 22.4% to 17 billion euros, according to the central bank.

The COVID-19 epidemic wreaked havoc on Azerbaijan's economy, which is traditionally reliant on oil and gas, since decreasing demand for oil and supply issues pushed up global oil prices. As the economy shrunk, restrictions to stop the virus from spreading had an impact on domestic consumption and expenditure.

In 2020, as restrictions were removed and the economy began to revive, the Azerbaijani government enhanced its economic growth prediction for 2021, backed by improving oil prices on global markets and development in the non-oil sector of the ex-Soviet republic.

In 2020, the country's gross domestic product (GDP) was expected to expand 4.6% to 42 billion euros, up from a prior forecast of 3.4%. The GDP of Azerbaijan grew by 5.6% in 2021, compared to a decrease of 4.3% the previous year.

The oil industry increased at a rate of 1.8%, while the non-oil sector grew at a rate of 7.2%. GDP was 47 billion euros in nominal terms.

According to the central bank, banks' loan portfolio increased by 17.7% year on year to 8.5 billion euros as of December 31, 2021. Individual deposits climbed by 12.3% to 4.6 billion euros, increasing the deposit portfolio by 30% to 13 billion euros.

Azerbaijan has 26 banks, 12 of which have foreign capital. The state-owned International Bank of Azerbaijan, the country's largest bank by assets, reported a 61% increase in net profit year over year to 110 million euros in 2021.