Fitch Ratings: «Expressbank not very important for the financial system of Azerbaijan"

Fitch Ratings has assigned local JSC Expressbank a long-term issuer default rating at "B".

As noted in the bank, the rating outlook is Stable. The agency denied the level of support. At the end of the first quarter of 2014 over 44% of the loan portfolio were represented affiliates of the bank, and a further 9% - subsidiaries of the state monopoly Azerenergy. Most of them are directly or indirectly working for government contracts; they, like Azerenergy have significant interest-free accommodation in the bank (34% of total customer accounts as of 1 April 2014), which are not formal provision, but give some protection in terms of recoveries; high capitalization of the bank, which should allow to perform regulatory capital requirements, if fully deduct such loans of capital, reads the information.

Concentrated customer deposits form the basis of funding Expressbank (88% of total liabilities at the end of the first ​​quarter of 2014), although the largest deposits are affiliated companies and Azerenergy. Estimated Fitch, liquidity risks mitigated by significant liquidity reserve, which was enough to pay off 41% of customer funding at the end of the I-st ​​quarter of 2014, and also due to the rapid turnover of retail loans. Bank takes 21^st place (out of 44 structures) in Azerbaijan in terms of assets.

According to experts the agency Expressbank ratings could be upgraded in the event of a significant strengthening of market positions due to growth in business with third parties, to reduce the volume of transactions with related parties and maintain an acceptable asset quality and profitability. Supporting long-term IDR ('No') and the support rating of "5" reflects its rather limited relevance for the country's banking system. "Support from the private shareholders of the bank is, however, its score is complexity. Fitch does not expect the revision level of support for the long-term IDRs and Support rating of the bank in the near future", - the report says.

JSC Expressbank was established in 1989. Its main shareholders are the capital LLC Ador (42%) and Interenergy (40%), registered at the address where the registered members of the family of the head of state. In addition, a share of 17.4% is owned by the entity Energoservice registered in the village Gyryly in Agstafa. --17D-