Moody's: Oil price plunge to effect credit rating of Azerbaijani banks negatively
- 19 March 2020
Moody's Rating Company states plunge in oil prices will negatively effect credit rating of banks of Azerbaijan, Russia, and Kazakhstan, APA-Economics reports citing new report of the Agency.
Drop in oil prices on market is very dangerous for capital and profitability of banks of these countries and the situation will also affect credit ratings.
Furthermore, it is noted worsening economic condition will cause significantly decrease of quality of bank assets.
According to the report of the rating Agency, if oil prices are at low level for a long period of time, Azerbaijan's Manat will have to be subjected to devaluation.
However Moody's note that Russian, Kazakh, and Azerbaijani banks are less sensitive in comparison with crisis period of 2014-2015.
"Tough regulation standards, management of risks and improvement of lending standards since then have caused increase of liquidity and capital of banks, and decrease of their dollarisation, as well as made banks less sensitive for the shocks caused by oil prices", noted in the report.