Fitch Ratings Confirms Forecast of Ratings of Two Azerbaijani Banks as Negative

The international rating agency Fitch Ratings affirmed the long-term issuer default rating of Azerbaijan’s Access Bank at BB +, and the rating of Pasha Bank at BB-, according to the agency. The forecast of both banks' ratings has been affirmed at Negative.

Fitch also downgraded Access Bank’s stability rating to bb- from b+.

‘The long-term IDR of Access Bank at BB+ and the support level of 3 reflect the moderate probability that the bank will continue to receive support from its shareholders, which are the international financial institutions (IFIs), namely the European Bank for Reconstruction and Development, the International Finance Corporation, KfW and the Black Sea Trade and Development Bank,’ the agency noted.

In case of necessity the shareholders will support the bank, which is due to the IFIs’ strategic commitment to microcredit in emerging markets.

‘Lowering the VR AB rating to B + from BB- reflects the significant deterioration in asset quality caused by the devaluation of the manat in 2015,’ the report says.

Confirmation of Pasha Bank's rating is due to a moderate probability of support from the Azerbaijan authorities in case of need. This rating takes into account the fact that Pasha Bank jointly with Capital Bank (both banks are part of Pasha Holding) has a market share of about 15% on deposits. Besides, the bank is owned by a structure closely connected with the government, which raises the potential of providing support to it if necessary.

Fitch notes the strong capitalization of Pasha Bank, the availability of ample liquidity and still managed assets, the quality of which has deteriorated against the backdrop of the downturn in the economy as a whole.   ----71D