Outlook on IBA

Confirmation of the issuer default rating, support rating, the rating of the potential government support, as well as senior debt rating of the International Bank of Azerbaijan (IBA) reflects Fitch's view that there is a moderate probability of support for the government in case of need.

The rating agency assesses plans to recapitalize the bank up to 500 million manat by the end of 2016, as moderately positive. However, according to its peer group, the planned growth of the loan portfolio is unlikely to lead to significant improvements in capital adequacy ratios. It is noted that due to the placement of Eurobonds worth $ 500 million. In the first half of 2014 short-term financial risks of the bank were reduced. The state of the bank's liquidity is assessed as positive.

"The long-term issuer default rating and the rating of senior debt can be raised to BB + in the case if the government provides funding in accordance with the announced plan of capitalization, if the sovereign credit profile of the country and its ability to support not suffer as a result of lower oil prices, as well as, if the asset quality and solvency of the IBA is not significantly reduced because of the potential negative impact on the economy of falling oil prices," says the agency.

IBA was founded in 1992 and is the largest bank in Azerbaijan. Currently, 50.2% stake in the bank is owned by the state, and 49.8% - by private shareholders. --17D-