Baku, Azerbaijan, June 19
Trend:
S&P Global Ratings has revised its outlook on Azerbaijan-based Kapital Bank OJSC from stable to positive and affirmed its 'BB-/B' long- and short-term issuer credit ratings, Trend reports with reference to the ratings agency.
“We expect the bank will likely further strengthen its retail market leadership in Azerbaijan and maintain adequate capitalization, thanks to high earnings capacity and its supportive shareholder,” reads the report. “We are therefore revising our outlook on Kapital Bank to positive and affirming the 'BB-/B' ratings.”
“The positive outlook indicates that we could raise the ratings in the next 12 months if the bank's credit profile improves through higher market share, sustainable revenue and earnings growth, a sufficiently high capital buffer, and adequate asset quality,” the report said.
In 2018, Kapital Bank resumed its business growth, strengthened its market position, and improved asset quality, while profitability hit a record high with a return on average equity (ROAE) of 36 percent, according to the report.
“The bank’s loan portfolio grew by 19 percent over 2018, mainly driven by unsecured lending to its retail salary clients, and it took a 20 percent share of retail loans in the country,” said the report.
“We note that, over the past four years, the bank has strengthened its market share and now represents about 13 percent of systemwide assets and customer deposits,” the ratings agency said. “Along the way, the bank has sustainably increased operating revenues and profitability, which hit a record high in 2018 with a ROAE of 36 percent, compared with a 5-7 percent average for the system. In our view, high profitability reflects management’s ability to maintain a relatively high margin, improve operating efficiency, and keep credit costs under control.”