By Trend
PASHA Bank’s share in the system-wide corporate lending reached
around 17 percent as of Sept. 30, 2018 (9 percent at end-2016),
Standard & Poor's (S&P) said, Trend reports.
S&P Global Ratings today affirmed its 'BB-' long-term and
'B' short-term issuer credit ratings on Azerbaijan-based PASHA
Bank. The outlook remains negative.
“The affirmation reflects our view that the bank’s
creditworthiness continues to benefit from its solid market
position in Azerbaijan’s corporate lending sector,
better-than-peers’ geographical business diversification, and
ongoing capital and funding support from its shareholder, PASHA
Holding,” S&P said.
“We believe these benefits largely offset sustained pressure on
the bank’s capital or potential risks associated with high lending
growth,” S&P said.
PASHA Bank continued its strategy of high business growth in
Azerbaijan, Turkey and Georgia throughout 2018.
“We estimate that the bank’s loan portfolio increased by about
25 percent last year, with growth in Azerbaijan of close to 32
percent,” S&P said. “The bank’s share in the system-wide
corporate lending reached around 17 percent as of Sept. 30, 2018 (9
percent at end-2016), which is significant given the highly
concentrated Azerbaijani banking sector.”
“We expect PASHA Bank will continue above-average business
growth in Azerbaijan to increase further its market share and
business volumes in corporate banking,” S&P said.
“We also note that overseas business in Turkey and Georgia,
which now represent about 25 percent of the bank’s loan portfolio,
increases the geographical diversity of the bank’s business model
and supports its business stability,” S&P said. “As such, we
think that the competitive trends are favorable for PASHA Bank’s
business position and could facilitate improvements in the bank's
creditworthiness in the coming 12-18 months.”
The bank’s asset quality remains solid compared with local
peers: Over the first half of 2018, the bank’s nonperforming assets
declined by 19.0 million manats to 89.3 million manats,
representing 5.7 percent of the loan portfolio versus 7.7 percent
at year-end 2017.
The bank also reduced the single-name concentration in its
portfolio to 40 percent from 45 percent at year-end 2017, which is
now comparable to those of peers in the Commonwealth of Independent
States.
“We do not expect material impairments of the bank’s portfolio
in Turkey because of its short-term and secured nature, consisting
mainly of factoring and trade finance loans,” S&P said.
“However, considering our expectation of elevated lending growth in
the highly risky economic environment of Azerbaijan and Turkey, we
can’t exclude the increase of nonperforming loans and credit losses
in 2019-2020.”
PASHA Bank has been operating in Azerbaijan since 2007 and is a
member of the PASHA Group of Companies, which is a large investment
holding operating in the insurance, construction, construction
materials production, tourism and other sectors. Kapital Bank, one
of the largest banks in the Azerbaijani retail market, also belongs
to the PASHA Group of Companies.
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