Moody's Investors Service, ("Moody's") today assigned Counterparty Risk Ratings (CRR) to the following five Azerbaijani banks: OJSC Bank of Baku, International Bank of Azerbaijan, Joint Stock Commercial Bank Respublika, Kapital Bank OJSC and OJSC XALQ BANK .
Moody's said that the CRRs assigned to Azerbaijani banks are in line with their Counterparty Risk Assessments (CR Assessment) already outstanding.
‘An upgrade of Azerbaijani banks' CRRs over the next 12-18 months could be driven by an upgrade of their standalone BCAs. The banks' BCA may, in turn, be upgraded following improvements in their solvency metrics (particularly, if level of problem loans were to significantly decrease, and capitalization and profitability were to materially improve) and provided liquidity profiles of these banks does not deteriorate. Also, CRRs of those banks which benefit from government support may come under upward pressure following upgrade of the sovereign rating of Azerbaijan. The banks' CRRs could be downgraded as a result of a deterioration in their BCAs. The banks' BCAs may be downgraded following a material deterioration in the country's economic environment affecting their asset quality, capitalization and profitability. The CRRs of those banks which benefit from government support may be downgraded following a lowering in the sovereign rating of Azerbaijan or a re-assessment of the likelihood of government support’, the agency said.