Moody’s upgrades IBA’s ratings

Moody's Investors Service today upgraded the ratings of the International Bank of Azerbaijan (IBA), Report informs citing the agency.

The outlook on the long-term deposit ratings of IBA remains positive. Long-term Bank Deposits were upgraded to B1 from B3, Baseline Credit Assessment - to b3 from caa2 and Long-term Counterparty Risk Assessment - to Ba3(cr) from B2(cr).

The upgrade of IBA's BCA to b3 from caa2 reflects the positive impact on the bank's solvency metrics stemming from (1) improved asset quality, restored capital buffers and robust net income; as well as (2) a material reduction in the bank's short foreign currency position reducing the susceptibility of its profits and capital to exchange rate volatility. IBA's profitability improved following its restructuring, thanks to decreased funding and operational costs, as well as the replacement of problem loans with yielding liquid assets. As a result, in 2018, under local GAAP, the bank posted net income of AZN426 million (or AZN295 million, if adjusted for release of provisions), a strong return on average assets (ROAA) of 3.5%. Based on the current balance sheet structure, Moody's expects IBA to generate robust pre-provision income in the next 12 to 18 months.

Chairman of IBA Management Board Abbas Ibrahimov noted that the new decision of the Moody’s Investors Service reflects sustainable development processes in the bank: "Positive tendencies in the banks are followed and assessed by international rating agencies."