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By Trend

Fitch Ratings, an international ratings agency, has improved ratings outlook for the International Bank of Azerbaijan (IBA), Trend reports with reference to the ratings agency.

Fitch has revised the Outlook on IBA Long-Term Issuer Default Rating (IDR) to Positive from Stable and affirmed the rating at 'B-', according to the report.

The revision of the Outlook reflects Fitch's base expectation that IBA's credit profile is likely to improve over the next 12 months as the bank continues to gradually close its large, short open-currency position via FX purchases on the market. The affirmation of IBA's Long- and Short-Term IDRs and Viability Rating (VR) reflects the bank's low-risk asset structure, sound liquidity and improved profitability.

In 2018, the bank’s lending growth was a moderate 9 percent; however, growth may accelerate once IBA finalizes its new strategy.

In Fitch's view, IBA has become structurally profitable again post restructuring, supported by the low cost of funding, reduced operating expenses and low-risk asset exposures. Fitch estimates the Fitch Core Capital (FCC) ratio of the bank at 37 percent.

In 2018, IBA's net interest margin was 4.5 percent, the cost-income ratio was 25 percent and return on equity 20 percent.

The bank’s total assets at the end of last year amounted to 7.9 billion manats, the loan portfolio - 1.9 billion manats, the deposit portfolio - 4.08 billion manats, the share capital - 1.16 billion manats, interest income - 297 million manats, net profit - 426 million manats, while there was a loss of 130 million manats in reserve deductions.

The data were taken from the report “Business Outlook in Azerbaijan” prepared by Deloitte.

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