S&P expects moderate growth in loan portfolio of Azerbaijan's Kapital Bank
Baku, Azerbaijan, March 1
By Azad Hasanli - Trend:
Over the next two years, the loan portfolio of Azerbaijan's Kapital Bank will grow by an average of five to seven percent, S&P report reads.
S&P Global Ratings has today revised its outlook on Azerbaijan-based Kapital Bank to stable from negative and affirmed the 'BB-/B' long- and short-term issuer credit ratings.
The revision of the outlook on Kapital Bank to stable reflects S&P's view that the bank's creditworthiness will benefit from stabilizing economic conditions in the country.
"In particular, we think that the bank will continue to demonstrate solid financial performance, underpinned by a strong customer franchise, sustainably expanding operating revenues, and controlled credit losses. We also think that the bank's asset quality will likely remain stable and better than the system average, and that the bank will maintain its adequate capital buffer and significant liquidity cushion," the report reads.
According to S&P, retail lending will likely be the key driver of business growth, while corporate lending is not expected to increase.
"Meanwhile, we assume that a capital injection of Azerbaijan manat (AZN) 40 million ($23.5 million) from shareholders in the form of preferred shares, which the bank will receive in the first half of 2018, will support the bank's capitalization," the report reads.