Fitch affirmed the ratings of five private banks in Azerbaijan

Fitch Ratings affirmed long-term issuer default rating ( "IDR" ) in foreign currency and Unibank DemirBank at "B", and AtaBank , AGBank and Bank Technique level "B-". Outlook on the ratings and Unibank Demirbank changed from "Stable" to "Positive" , outlook AGBank changed from "negative " to "stable ." Outlook on the ratings and AtaBank Bank Technique - " stable " . Full list of rating actions is at the end of this message .

According to the report Fitch Ratings, affirmation reflects generally stable credit metrics listed banks and currently favorable economic situation in general , supported by high oil prices . The impact of higher oil prices on the non-oil sector of the economy , combined with significant release of state funds supported a gradual resolution of problems with the assets after the crisis. In addition, the net profit of banks (especially in Unibank and DemirBank) had a favorable effect more rapid growth and high-margin retail lending micro credits.

All five banks are facing pressure on capital due to weak capital generation of profits ( except Unibank) by a decline in margins in corporate lending , small-scale activities , is still essential in provisioning for impairment losses and limited new capital contributions . Return on average capital (ROAE) was at a moderate level of 5% , AGBank and 10% in 2013 AtaBank Meanwhile Demirbank and Unibank, seems to have a more favorable position to improve the capitalization of internal sources, as these two financial institutions ROAE rate was comparable to the growth of credit in 2013, the agency said .

According to Fitch Ratings, Unibank and DemirBank ratings could be upgraded if they demonstrate a long history of an acceptable quality of assets and will be able to protect their profitability in a more intense competition and higher market saturation in their lending segments. Conversely, a marked weakening of profitability and / or deterioration in asset quality is likely to lead to a revision of forecast "Stable".

Potential for the ratings Bank Technique, AGBank and AtaBank is unlikely in the short term, as evidenced by "stable" outlook on their ratings. At the same time, a gradual improvement in the operating environment , further refund on legacy impaired loans and strengthening the capital of banks generate profits at the expense over time can cause moderate upward pressure on the rating.

Fitch Ratings believes that the banks' ratings of five could come under downward pressure in the event of a significant and prolonged decline in oil prices , although such a scenario is not expected in the near future . In the event of a sharp deterioration in asset quality and / or liquidity of the bank downgrade is also possible. -15D -