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Fitch expects improvement of Azerbaijani bank’s financial condition to end till late 2015

Fitch expects improvement of Azerbaijani bank’s financial condition to end till late 2015

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Date: 14 December 2015 08:17

Baku, Azerbaijan, Dec. 14

By Maksim Tsurkov – Trend:

Fitch is likely to resolve the Rating Watch on IDRs (Issuer Default Rating) of the International Bank of Azerbaijan (IBA) by a one-notch upgrade after improvement of its assets’ financial condition, the “2016 Outlook: CIS and Georgian Banks” report of the agency said.

“The IBA has received around 2 billion manats of cash proceeds to date, and the remaining 1 billion manats is likely to come by end-2015,” said the report.

The State Securities Committee (SSC) of Azerbaijan registered the issue prospectus of interest covered bonds of the Aqrarkredit CJSC non-bank credit organization totaling 3 billion manats.

Emission of bonds of Aqrarkredit CJSC is a part of measures to improve the financial condition and the management of International Bank of Azerbaijan JSC, return overdue loans issued by the bank, and regarding the management of distressed assets.

The distressed assets of the International Bank of Azerbaijan were transferred to the state-owned Aqrarkredit CJSC non-banking credit organization.

In August 2015, Fitch Ratings placed International Bank of Azerbaijan's (IBA) Long-term foreign currency Issuer Default Rating and Viability Rating on Rating Watch Positive. (Currently it is at “BB” level)

If the clean-up is completed as planned, Fitch is likely to revise IBA's Support Rating Floor up to 'BB+' and upgrade the bank's support-driven Long-term Issuer Default Rating.

The Rating Watch Positive on IBA's Viability Rating reflects the potentially significant improvements in the bank's asset quality, capitalization and liquidity position after the asset buy-out. As of July 1, 2015, the bank's assets increased by almost 17 percent compared to the beginning of the year and amounted to 10.76 billion manats. At the end of the half year, the share capital rose to nearly 641.3 million manats (a 8.7 percent increase).

The International Bank of Azerbaijan was established in January 1992.

The bank’s main shareholder is the Azerbaijani government, which holds 51.07 percent of shares, while private individuals and legal entities hold the remaining shares.

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