Azerbaijan, Baku, Sept 12 /Trend A.Akhundov/
Azerbaijani PASHA Bank has received the first international rating, Member of the Board, Chief Executive Officer on Investment Taleh Kazimov said at a news conference Wednesday.
Standard & Poor's Ratings Services had assigned its 'BB-' long-term and 'B' short-term counterparty credit ratings to Azerbaijani PASHA Bank. The outlook is stable.
"It is the highest rating among commercial bank with full local capital," Kazimov said. "It is very good achievement."
"The ratings reflect the 'bb-' anchor for a commercial bank operating in Azerbaijan, our view of the bank's "adequate" business position, "strong" capital and earnings, "moderate" risk position, its "below average" funding, and "adequate" liquidity, as our criteria define these terms. The stand-alone credit profile (SACP) is 'b+'," Standard & Poor's Ratings Services said.
Under S&P bank criteria, it use their Banking Industry Country Risk Assessment economic and industry risk scores to determine a bank's anchor, the starting point in assigning an issuer credit rating (ICR). The anchor for a commercial bank operating only in Azerbaijan is 'bb-'.
S&P economic risk score for Azerbaijan is '7' and industry risk score is '8'.
"The ICR is one notch higher than the SACP, reflecting our view of the bank's "high" systemic importance in the country and our assessment of the Azerbaijan government as "supportive," the agency said.
Considering PASHA Bank's ownership structure, its rapidly growing market share, and its important role in servicing the needs of large corporates in the country, the agency believes that a loss of confidence in PASHA Bank would likely lead to a loss of confidence in the entire national banking system, and would prompt extraordinary support from the government.
"The stable outlook reflects our expectation that PASHA Bank will expand its franchise and loan book quickly in the next two years, at least by 30% per year, while maintaining strong capitalization and adequate liquidity buffers," the agency said.
According to the agency the possibility of a positive rating action is currently remote. However, it could happen primarily if PASHA Bank were to significantly diversify its funding profile and reduce concentration on single-name deposits and related-party funding, which S&P view as the main rating weaknesses for the bank.
"A negative rating action could occur if the rapid loan growth were to materially worsen the bank's capitalization and trigger a fall in the RAC ratio before adjustments to below 10%. A significant deterioration in asset quality once the portfolio seasons could also put pressure on the rating," the agency said.
Kazimov noted that the bank is going to receive rating from the international agency Fitch Ratings in the near future.
PASHA Bank was established in June, 2007 and operates under licence of the Central Bank of Azerbaijan dated Jan.28, 2007.
The Bank, along with Pasha Insurance, PASHA Life, Pasha Travel and Pasha Construction, is included in the Pasha Holding Company which is actually an investment company, but not a classic holding company.
Kapital Bank is also included in the structure of the Pasha Group. The Holding owns 99.75 per cent of the shares in Kapital bank.
Pasha Bank shareholders are: PASHA Holding with 60 per cent, ADOR Ltd with 30 per cent and Arif Pashayev with 10 per cent.