Finance

Home page

Finance

Prognosis on one more Azerbaijani bankâ€™s rating improved

28 September 2012 09:36 (UTC +04:00)

Baku. Vahab Rzayev â€“ APA-Economics. Moody’s Investors Service has today changed the outlook on Xalq Bank’s B3 long-term local and foreign currency deposit ratings to positive from stable.

The Agency told APA-Economics that the positive outlook reflects Xalq’s progress in reducing its credit concentration risk and improvements in capitalization. At the same time, the ratings remain constrained by the bank’s evolving risk management practices, low business diversification and funding base concentration.

According to the statement, in 2011, Xalq’s profitability improved as its net income increased by 81% to AZN24.4 million, from AZN13.5 million in 2010, translating into a return on average assets of 3.65%. (2010: 2.41%).

Moody’s observes that Xalq’s funding base remains concentrated as the eight largest depositors accounted for 56% of non-equity funding at YE2011, with a large share provided by related parties. However, Xalq’s liquidity position is supported by its stable funding base and a sufficient level of liquid assets that typically account for around 30% of total assets.