Azerbaijan's Kapital Bank changes dividend payment policy

Azerbaijan's Kapital Bank changes dividend payment policy

Baku, Azerbaijan, Oct. 24

By Azad Hasanli - Trend:

Kapital Bank, a major retail bank in Azerbaijan, plans to change the principle of making dividend payments to its shareholder from next year, the international ratings agency Moody’s Investors Service said in a message.

Moody's notes that presently the bank pays out all of its profits to shareholders as dividends, but from next year it will limit payments to 60 percent of its net profit.

The agency approved the long-term deposit rating of the bank in local and foreign currencies at Ba3 and revised the outlook from negative to stable.

The confirmation of the rating itself and the improved forecast reflect the improved operating conditions in Azerbaijan and the bank’s resilience to external shocks. The bank's financial indicators are at a level above the market average.

In 2015-2017, the volume of problem loans of the bank amounted to six to seven percent of the entire portfolio, and reserves covered 90-100 percent of loans issued.

Economic growth in Azerbaijan, which is expected at two percent in 2018 and three percent in 2019, together with a declining inflation and a stable manat, should increase the incomes and creditworthiness of borrowers, in particular individuals who account for 67 percent of loans issued by the bank (as of July 1, 2018), the message reads.

The bank completed 1H2018 with a profit of 64.8 million manats, which exceeds the corresponding figures of rivals. According to Moody’s, the bank will maintain high profitability in the next 12-18 months.

At the same time, the agency mentioned that by the end of 2018, the bank plans to increase its authorized capital by 40 million manats.

In the third quarter of 2018, the bank's share capital amounted to 185.85 million manats. After capitalization, this figure will reach 225.85 million manats.

Kapital Bank, being a successor of Sberbank, has 140 years of history in banking business. Its client base exceeds three million individuals and more than 22,000 legal entities. The bank is a member of PASHA Holding.

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Follow the author on Twitter: @AzadHasanli

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