Baku. 6 November. REPORT.AZ/ According to the report, the reason of rating affirmation and outlook of Expressbank, Unibank, Demirbanki Atabank is a moderate negative impact on their unfavorable economic environment that occurred against the backdrop of a sharp drop in commodity prices. In general, the deterioration in asset quality of the banking sector has had an impact on these banks. The agency stressed the possibility of downgrades in the future, pointing out several possible reasons: a sharp reduction in public spending, the high level of debt dollarization in these banks (Unibank - 48%, Demirbank - 34%) and the February devaluation, a sharp increase in 2013-2014 problems with payment micro-credits, etc.
Despite this, according to the agency, the profitability of normal bank loans and the stability of buffer capital will allow to maintain asset quality at a high level. At the same time, cyclical movements in asset quality is reflected in the low banks' ranking.
Relatively high ratings of Expressbank, Unibank, Demirbanki Atabank is associated with the ability of the first three banks to "digest" strong losses. Unibank and Demirbank are more profitable, Expressbank has a stable buffer capital.
Among the main credit risks, agency highlights the unsecured consumer loans of Unibank and Expressbank. According to the report, the share of overdue for 90 days and non-performing loans of these banks accounted for 11-12% of total loans in the first half of 2015. In 2014 this figure was 3-4%. Despite this, the yield of normal bank loans was 12%, the average yield - 7%. This is sufficient to cover possible losses. Unibank's volume of overdue loans increased to 11%, secured loans from the reserves to 96%. Expressbank's figures are 1.4% and 114% respectively.
Demirbank's volume of overdue loans in the first half was 10%, the yield of normal loans - 7.2%, secured loans from the reserves - 70%. Atabank's figures are respectively 6.6% and 32%.
AGBank's volume of overdue loans amounted to 29%, 40% of which provided at the expense of reserves, capital adequacy ratio below the minimum requirement of 8.6%.
International rating agency Fitch affirmed new ratings of 5 commercial banks based in Azerbaijan.
Report informs citing Fitch, long-term issuer default rating in foreign currency of Expressbank, Unibank and Demirbank are affirmed at B level, of Atabank - at the B level. The outlook is stable.
In addition, the agency downgraded the issuer default of AGBank OJSC from B- to CCC, suspended the assessment rating outlook as negative.