Azerbaijan, Baku, Dec.3 / Trend, N.Ismayilova /
Moody's Investors Service has assigned B3/NP/E rating with negative outlook to International Bank of Azerbaijan Moscow, the agency's official website reported on Friday.
The Agency assigned to the bank B3 long-term and Not Prime short-term local-currency deposit ratings, B3 long-term and Not Prime short-term foreign-currency deposit ratings and E standalone bank financial strength rating (BFSR), mapping to Caa1 on the long-term scale.
International Bank of Azerbaijan Moscow's B3 long-term ratings carry a negative outlook while E BFSR carries a stable outlook.
The negative outlook on International Bank of Azerbaijan Moscow's B3 local and foreign currency deposit ratings reflects a negative outlook of International Bank of Azerbaijan's standalone rating.
Moody's notes that International Bank of Azerbaijan Moscow's E BFSR is constrained by (i) the bank's small size and its limited market franchise in Russia, (ii) high appetite for credit risk -- demonstrated by high concentration levels in its loan book, including high exposure to construction and real estate development sectors, (iii) its weak profitability, (iv) a high dependence on the parent's related business projects and funding .
International Bank of Azerbaijan Moscow's appetite for credit risk, demonstrated by high credit concentration, represents a key risk challenge. As reported in International Bank of Azerbaijan Moscow's audited IFRS statements, at YE2010 the bank's aggregate exposure to the 23 largest customers exceeded 50% of total gross loans and 500% of Tier 1capital. International Bank of Azerbaijan Moscow's exposure to construction and real estate development projects exceeded 300% of its Tier 1 capital.
In Moody's opinion, this renders the bank vulnerable to the financial performance of a limited number of major customers. This risk, however, is partly mitigated by parental guarantees covering 56% of the total loan book which reduces pressure on the bank's capital and liquidity.
IBA-Moscow, a subsidiary of the International Bank of Azerbaijan, was established in 2002. It is the first and only bank in Russia with 100 percent Azerbaijani capital. The bank operates in Russia.