Fitch affirms Pasha Bank's Rating

# 09:27
1 September 2017

Fitch Ratings has affirmed Azerbaijan-based Pasha Bank's (PB) Long-Term Issuer-Default Rating (IDR) at 'B+'. The Outlook is Stable. A full list of rating actions is at the end of this rating action commentary, APA reported.


The affirmation reflects limited changes since our last review. PB's 'B+' Long-Term IDR is based on the bank's intrinsic strength, as expressed by its Viability Rating (VR) of 'b+'. The latter remains primarily constrained by the weak operating environment (as evidenced by numerous recent failures in the banking sector); dependence of the bank's business model and performance on the stability of cheap related party funding; and the limited track record of its sizable foreign operations.


At the same time, the rating positively considers PB's systemic importance; solid consolidated capitalisation, although this is somewhat weaker on a standalone basis due to the sizeable deduction of investments into foreign subsidiaries; manageable asset quality and ample liquidity. The Stable Outlook reflects Fitch's expectation that despite the potential for some further asset quality deterioration, this should be covered by pre-impairment profits and additionally mitigated by the bank's solid capital buffer.