According to the agency, Muganbank's business profile is somewhat more sustainable than that of many midsize banks in Azerbaijan, Russia, or Kazakhstan.
“Muganbank has a well-established position in most of Azerbaijan's regions, an adequate business mix, and a less aggressive growth strategy. Because of its track record of sound core banking profitability, the agency considers Muganbank's business position to be moderate,” said the agency.
S&P thinks the decline in real disposable income, as well as a partial transformation of the currency risk in the credit risk due to the significant weakening of the national currency (20 percent of loan portfolio consists of foreign currency loans) will lead to the deterioration of the bank's asset quality indicators in 2016. “The ratio of the bank ROA will drop to 5 percent.”
S&P said it a negative rating action can be taken, if it arrives at the conclusion of a significant deterioration in Muganbank.
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