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S&P: Situation surrounding IBA unlikely to affect other banks

31 July 2017 09:19 (UTC +04:00)

“The restructuring plan of IBA’s liabilities was approved by international creditors on July 18. According to our calculations, Azerbaijan’s external public debt will increase up to 9% of GDP”, the agency said.

S&P has removed SOFAZ’s deposits in IBA, which will be restructured, from the structure of Azerbaijan’s government liquid assets.

“We think the situation surrounding IBA unlikely will affect other banks. However, the banking sector still remains sensitive to weak and complicated economic situation. According to the figures by the Central Bank of Azerbaijan, share of non-performing loans in the total portfolio makes up 12% as of May, 2017. However, we think that the level of toxic assets is higher in real”.

S&P analysts say the monetary policy is not so effective, but, quick exchange rate of manat reduced pressures on exchange rate of manat and decline of currency reserves.

“Along with this, we should note that the opportunities of Central Bank’s influence on the situation are limited. High dollarization on deposits (more than 60%) limits regulator’s influence on the domestic monetary market”, the agency said.