Baku. Yegane Lachinzade – APA-Economics. Moody's Investors Service has today upgraded Kapital bank's long-term local and foreign-currency deposit ratings to Ba3 from B1.
According to APA-Economics, the upgrade of Kapital Bank's ratings reflects its significantly strengthened capitalisation and profitability, providing a sufficient cushion against expected heightening credit losses amidst the currently challenging operating environment in Azerbaijan.
To support the bank's business growth, its shareholders provided an AZN 70 million capital injection in H1 2014 (an 88% increase in authorised capital) and AZN 30 million in 2013 (an 60% capital increase). This boosted the bank's Tier 1 ratio to 20.2 % and total capital adequacy ratio (CAR) to 27.8% as of year-end 2014 from 16.02% and 19.64%, respectively at year-end 2013.
Given the bank's planned loan growth and dividend payout projections, Moody's expects the bank's capital to be depleted further, but it does not expect the CAR to decline below 17%, in line with the bank's target.
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