S&P upgrades Azerbaijani MuganBank’s ratings

Finance Materials 3 February 2022 11:58 (UTC +04:00)

BAKU, Azerbaijan, Feb. 3

By Nazrin Israfilova - Trend:

S&P Global Ratings upgraded the long-term and short-term credit ratings of Azerbaijan’s MuganBank OJSC from "CCC + / C" to "B- / B", Trend reports.

The rating outlook was confirmed as "stable". The liquidity indicators of MuganBank OJSC have been improved and they are expected to increase in 2022 as well.

According to S&P assumptions, MuganBank OJSC will maintain liquidity and is unlikely to face a big outflow of customer deposits this year.

“The bank's capitalization, measured upon Risk-Adjusted Capital (RAC) ratio, will remain below three percent in 2022 and the bank will get some profit in 2021-2022,” the message said. “MuganBank's asset quality is lower than that of other similar banks, but we expect the volume of problem loans will continue to decrease.”

“The stable outlook reflects expectations that the recovering growth rates of the Azerbaijani economy and the strategy adopted by the bank may contribute to the process of increasing the stability of the market positions of MuganBank OJSC, maintaining of sufficient liquidity and gaining of some profit in 2022,” S&P said.

S&P does not expect the bank's rating to be upgraded from stable to positive over the next 12 months if a market share is not increased or asset quality is not improved as a result of the implementation of the bank's new strategy.

Moreover, S&P will negatively assess the weakening of liquidity indicators caused by the renewed big outflow of deposits.