S&P: Azerbaijani bank intends to restructure up to 12% of loans
Baku, Azerbaijan, June 21
By Azad Hasanli – Trend:
S&P Global Ratings expects that the growth of nonperforming loans of Azerbaijan’s Muganbank OJSC will slow in 2017-2018.
According to S&P, those loans will reach 20 percent of the loan portfolio this year, with another 10-12 percent of restructured loans.
In 2016, Muganbank faced a material outflow of customer deposits, with a decline of about 30 percent. As a result, Muganbank's liquidity position came under significant pressure, with highly liquid assets declining by 77 percent over the year to about 14.5 million manat.
As of Dec. 31, 2016, the liquidity buffer net of restricted cash covered only 7.5 percent of customer deposits versus 24 percent a year earlier.
“We expect that Muganbank's capitalization will remain under pressure over the next two years since we forecast that the bank will be loss-making in 2017,” according to S&P Global Ratings. “We view positively Muganbank's shareholders' continued support, including 25 million manat injected in 2016 to support the bank's capitalization.”
“We could consider revising the outlook to stable or consider a positive rating action, if we saw that Muganbank's liquidity had improved,” according to S&P Global Ratings.
S&P Global Ratings lowered its long- and short-term counterparty credit ratings on Muganbank OJSC to 'CCC+/C' from 'B-/B'. The outlook is negative.