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PAŞA Bankın kredit reytinqi dəyişdi

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PAŞA Bankın kredit reytinqi dəyişdi

Beynəlxalq kredit reytinqi təşkilatı "S&P Global Ratings" PAŞA Bankın uzunmüddətli kredit reytinqini "BB-"dən "B+"a endirib. Proqnoz "stabil"dir.

 

"Marja" S&P-yə istinadən xəbər verir ki, reytinqin aşağı salınması problemli kreditlərin artması ilə Bankın kapitalının təzyiq altında qalması ilə bağlıdır.

 

"Stabil" proqnoz Bankın Azərbaycanda korporativ kreditləşmədə böyük bazarda payını, yüksək likvidliyini, güclü müştəri depozitləri portfelini əks etdirir.

 

Qısamüddətli reytinq iə “B” səviyyəsində təsdiq olunub.

 

 


 

Azerbaijan-Based PASHA Bank Downgraded To 'B+' On Weaker Capitalization And Asset Quality; Outlook Stable

 

- In 2019, PASHA Bank's capital position at the consolidated level remained under pressure and problem loans increased.

 

-Contrary to our previous expectations and despite ongoing business growth, the bank's business and customer diversity remains lower than that of major peers in the region.

 

-We are removing a positive transition notch, resulting in the lowering of our long-term rating on the bank to 'B+' from 'BB-', and affirming the 'B' short-term rating.

 

-We continue to assess the bank's stand-alone credit profile at 'b+'.

 

-The stable outlook reflects our view that the bank's solid market share in corporate lending in Azerbaijan, high liquidity buffer, and stable customer deposits will support its credit profile over the next 12-18 months despite lower capitalization.

 

S&P Global Ratings today lowered its long-term issuer credit rating on Azerbaijan-based PASHA Bank to 'B+' from 'BB-'. The outlook is stable.

 

We also affirmed our 'B' short-term rating on the bank.

 

The downgrade reflects our view that PASHA bank's credit profile has deteriorated over the past year due to sustained pressure on its capitalization and higher share of problem loans than we previously anticipated. Furthermore, contrary to our previous expectations, over the past three years the bank's rapid business growth has not led to a material improvement in customer diversity comparable with that of major peers in the region.

 

In 2019, PASHA Bank's asset quality deteriorated with the share of problem assets, which comprise Stage 3 loans under International Financial Reporting Standards (IFRS) and repossessed collateral, rising to 14.5% of the loan portfolio as of mid-year 2019 from 10.0% in 2018. Similarly, the bank's annualized cost of risk increased to 2.9% from 0.5% a year ago. This development reflects financial difficulties of the bank's two largest borrowers, which represent about 70% of total problem assets. Nevertheless, we note a number of mitigating factors. First, the bank's asset quality is now close to that of the rest of the system. Second, cash collateral covers about 40% of total problem loans. Finally, besides the two problem borrowers, the rest of the portfolio demonstrates good performance with past due loans (NPLs) at around 5.0% of the portfolio.

 

We expect that the bank's capital position at the consolidated level (including subsidiaries in Turkey and Georgia), as reflected in our risk-adjusted capital (RAC) ratio, will remain under pressure over the next two years. This is due to the combined effect of high business growth of 15%-20%, high dividend payments, a lack of Tier 1 capital support from the shareholder, and lower profitability on the back of high provisioning needs. We estimate that the bank's consolidated RAC ratio was close to 5.5% at year-end 2019, down from 6.6%, and we forecast it will deteriorate to 4.7%-4.9% in the next 12-18 months.

 

We view PASHA Holding's capital policy in relation to the bank as aggressive. PASHA Holding did not provide capital support or lower dividend aspirations in 2019 and we do not incorporate into our forecast new Tier 1 capital injections over the next two years except subordinated debt with low capacity to absorb losses. The latter supports regulatory metrics but is excluded from our RAC ratio. However, the shareholder may consider capital support for the new strategic period commencing 2021. The shareholder may also consider deconsolidating PASHA Bank Georgia and PASHA Bank Turkey to reduce sensitivity of the bank's capital position from negative foreign currency movements. We will revise our base-case forecast as soon as we get more details on planned capital injections or changes in PASHA Bank's group structure. In our base case, we assume the bank will continue distributing 60% of its net income as dividends.

 

In our view, Pasha Bank's strong market position in Azerbaijan's corporate lending segment continues to support business stability. The bank's market share in this segment increased to 18.6% as of Oct. 1, 2019, versus 15.6% at year-end 2018, and we think it may reach 22%-24% in 2020. However, contrary to what we expected earlier, the growth in market share has not led to meaningful customer diversity, which remains weaker than for leading banks in neighboring countries. This, in turn, reflects the relatively low size of Azerbaijan's economy and the bank's business model with its exclusive focus on corporate business.

 

We think that the bank's ample liquidity buffer and stable depositor base support its credit profile. As of year-end 2019, liquid assets, including cash, interbank deposits, and liquid investment in securities, covered about 48% of customer deposits. We also note that the bank's funding metrics look better than peers' due to a relatively low dependence on wholesale funding and a large buffer of liquid assets. On June 30, 2019, the stable funding ratio was about 214%, versus the 140% peer average, while customer loans to customer deposits stood at 45%, compared with the 120% peer average.

 

The stable outlook on PASHA Bank reflects our view that its solid corporate business franchise in Azerbaijan, high liquidity buffer, and stable customer deposits will support its credit profile over the next 12-18 months. Despite a somewhat more aggressive capital policy, the stable outlook includes the ongoing benefits Pasha Bank receives as part of the larger PASHA Holding.

 

We could take a negative rating action in the next 12-18 months if the bank's capital position continues deteriorating with our forecast RAC ratio falling below 3.0%. We could also consider a downgrade if pressure on the bank's asset quality results in problem assets significantly higher than peers' in Azerbaijan and credit losses materially exceeding our expectations.

 

We could consider a positive rating action if the bank improves its asset quality and capital sustainability, coupled with better customer diversity. A material improvement in the bank's capital position on the group level with our forecast RAC sustainably above 7.0% may also prompt us to take a positive rating action.

10.02.2020 08:10

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