BAKU, Azerbaijan, August 9. Moody's Investment Service confirmed the baseline credit assessments and deposit ratings of Azerbaijani Bank Respublika with positive outlook, Trend reports via the agency.
According to the report, the long-term deposit ratings of Bank Respublika have been affirmed at ‘B3’.
“Despite Bank Respublika's material focus on small and medium enterprises (SME) lending and unsecured consumer lending, its problem loans to gross loans ratio declined to 2 percent at year-end 2021 from 7.1 percent in 2020. This is attributed to stronger underwriting standards, stable USD/AZN exchange rate which will likely be supported by higher oil prices, and the scale of state support provided to households, entrepreneurs and SMEs in Azerbaijan following the pandemic,” Moody’s said.
As the agency expects, the bank’s liquidity reserves will remain at a good level, while its relatively weak capital will be sufficient to offset any adverse changes in asset quality following credit growth above similar rates in 2021. The positive outlook reflects the expected improvement in the bank’s credit profile over the next 12-18 months.
Meanwhile, the sustainable economic activity in Azerbaijan will lead to larger business opportunities and higher asset quality for banks, improving their standalone credit profiles.
“The rating actions take into account Moody's view that Azerbaijani banks will benefit from an improving operating environment which is underpinned by stronger economic activity and a stable currency, thanks to high oil prices that are providing sufficient volumes of foreign currency inflows,” the report said.
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