S&P revises outlook on Uzbekistan-based Amirbank

Business Materials 25 December 2013 13:11 (UTC +04:00)

Tashkent, Uzbekistan, Dec.25

By Demir Azizov - Trend:

Standard & Poor's Ratings Services said today it had revised its outlook on Uzbekistan-based Amirbank to stable from positive. At the same time, we affirmed the 'CCC' long-term and 'C' short-term counterparty credit ratings, S&P said today.

Growth during the first nine months of 2013 was sluggish at 4.8%, based on financials prepared in accordance with Uzbek generally accepted accounting principles. This was significantly lower than the bank's planned growth of over 30%. This lag in growth largely stemmed from the bank's prolonged inability to obtain regulatory capital of €5 million and its consequent failure to obtain a foreign currency license and open a branch in the Qarshi region, S&P said.

It was reported that the minimum amount of authorized capital of private banks is set at five million euros in Uzbekistan.

S&P assumes that failure to obtain a foreign currency license, which is very important for Uzbek banks, alongside the increased presence of other private banks in the Samarqand region, may undermine the bank's franchise. S&P therefore believes that the bank's capacity to improve its business and financial profile is more remote than we previously expected.

The ratings on Amirbank reflect the bank's "weak" business position, "very strong" capital and earnings, "weak" risk position, "below-average" funding, and "adequate" liquidity, as our criteria define these terms. The stand-alone credit profile is 'ccc'.

The stable outlook reflects our forecast of a slowdown in Amirbank's business development. S&P also expects the bank will maintain its strong capitalization and adequate liquidity over the next 12-24 months.

S&P could consider raising the ratings if the bank succeeds in obtaining a foreign currency license and improves its business diversity and the quality of its revenues base, while continuing to gradually improve its risk management and operational capacity and maintaining capitalization at strong levels.

S&P may revise outlook to negative if we see continued underperformance relative to the bank's planned strategy. We may also consider a negative rating action if the current liquidity cushion declines significantly so that it hurts the bank's solvency, or if the projected risk-adjusted capital ratio fell below 10%, which we would no longer view as strong.

Amirbank was established in Samarkand in October 2008. It is among small regional banks. Amirbank's owners are 18 physical and eight legal entities.

As of 2012, the bank's net assets increased by 23.1 percent - up to 27.459 billion soums, the total loan portfolio - by 19.7 percent to 12.776 billion soums, equity - 1.3 times, up to 13.891 billion soums.

The official exchange rate is 2.202.15/$ 1 and 3.028.91/1 euro on Dec. 25.