Capital Bank Percentage of Problem Loans Could Grow Almost Double

JSC Capital Bank due to high profit margins and one-off gains from the revaluation of foreign currency assets at the end of last year's activities had a net profit of 64 million manat (approximately $ 55 million based on the average annual exchange rate).

As stated in the analytical assessment of the international agency Standard & Poor`s, in the event of further deterioration of the economic situation in the country, the bank may adjust its development strategy by reducing the rate of growth. However, regardless of the relative prosperity it is also subject to financial risks inherent in the local banking system.

This means that the share of problem loans in the bank's portfolio may increase over the year from 9% to 15% due to the reduction in the real incomes of the borrowers. Meanwhile, about a fifth of the total loan portfolio of the bank is issued under the guarantee by the Ministry of Finance of Azerbaijan, as provided in accordance with the agreements on the financing of certain public projects, which reduces the relative credit risks.

JSC Capital Bank is highly dependent on the economic development of the country and the tightening of the operating environment for the Azerbaijani banking sector, which may affect the quality of its assets - the capital adequacy ratio may be reduced to less than 7%.

JSC Capital Bank (former Savings Bank) has been operating for more than 140 years. The main (99.87%) shareholder is PASHA Holding (99.87%), while the remaining 0.13% is distributed among the minority shareholders. --17D-