BAKU, Azerbaijan, Sept.2
By Zeyni Jafarov - Trend:
Azerbaijan’s Expressbank has faced a slight pressure on profit and capital as a result of the economic crisis in 2020 [due to COVID-19 pandemic], the international Fitch Ratings agency said, Trend reports on Sept.2.
According to the agency, the high risks of Expressbank in terms of asset quality and moderate profitability are balanced by the capital buffer, which provides the bank with a high ability to absorb losses.
"The bank's ratings reflect its cyclical and dependent on oil conditions of operational activity in the country," the agency noted.
Expressbank is an Azerbaijani bank with a share of the sectoral credit market at 1.5 percent at the end of the first half of 2021. Its business model is focused on high-yield consumer loans (47 percent of loans) and loans for micro-enterprises (11 percent), while corporate lending is mainly intended for SMEs.
"The quality of the bank's assets is declining, devalued loans have risen to 15 percent of the issued loans with four percent at the end of 2019 and at 46 percent were covered by reserves," Fitch Ratings further said.
Moreover, according to the agency, in the medium term can be used additional reserves for the cover. The high share of consumer lending and microcredit (57 percent of total loans) in the bank can lead to the additional devaluation of loans, although these sectors must be supported by the economic recovery.
At the end of April, the long-term default rating of the issuer of the Azerbaijani Expressbank was confirmed at ‘B’ level with a stable forecast.
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