Fitch Ratings on Several Banks in Azerbaijan

The international agency Fitch Ratings in its forecast called stable the ratings of local UniBank, DemirBank, Expressbank and AtaBank.

Long-term Issuer Default Ratings (IDR) in foreign currency of the first three structures are defined at the level , and for the last - . According to experts of the agency, this means a moderate deterioration in credit quality in the context of a weakening operating environment amid a sharp drop in oil prices, as well as limited direct impact of the recent devaluation of the manat by 34%.

It is estimated that asset quality is acceptable at Unibank (NPLs accounted for 6.8%, and 90% were covered by reserves) and DemirBank (6% to 80%), although moderate deterioration is already evident and may continue in view of the high proportion of foreign currency lending (more than 30% of all loans in both banks, including some of the unsecured retail portfolios). Expressbank OJSC had more favorable asset quality (NPLs were 1.4% and 164% were covered by reserves), but much higher levels of concentration of borrowers, including the largest loan (54.4% of share capital on the methodology Fitch) to a related party.

The Agency believes that the ratings of all banks under consideration could be lowered if the deterioration in the operating environment leads to a significant reduction in the quality of assets and / or to a shortage of liquidity. At the same time, according to the expectations of Fitch's base case scenario, these risks are already adequately reflected in the ratings of the banks that are in the category .