Kyrgyz banks have started to generate less income for their owners

Kyrgyz banks continue to earn billions, yet the return on capital invested in them has fallen significantly. By the end of May 2026, the banking sector’s return on equity (ROE) stood at 11.3 per cent, compared with 22 per cent at the end of last year.

In other words, the return on every KGS invested by shareholders in the banking business fell by almost half over the five-month period.

ROE can be described as a bank’s financial efficiency ratio. This indicator answers the question of how much profit the owners’ capital generates. The higher it is, the more effectively the bank converts invested funds into profit.

In the case of Kyrgyz banks, the decline in profitability coincided with a deterioration in financial results. Between January and May, the banking system generated a net profit of 10 billion 623.7 million KGS. This is 1 billion 351.6 million KGS, or 11.3 per cent, less than a year earlier.

The return on assets – that is, loans, securities and other resources from which banks generate income – has also fallen. The ROA fell from 3.3 per cent at the end of 2025 to 1.8 per cent by the end of May 2026.

It appears, therefore, that the banking sector remains profitable, but every KGS of capital and assets is now generating a lower return.

It should be added that, as at 31 May, there were 26 commercial banks and 307 branches operating in Kyrgyzstan.