Fitch Ratings has affirmed Azerbaijani Expressbank (EB) OJSC’s long-term Issuer Default Rating (IDR) at 'B' with a stable outlook.
The affirmation of EB's ratings reflects its stabilised asset quality, solid capital buffers, limited exposure to foreign-exchange risks and comfortable liquidity: ‘At end-1Q18, non-performing loans (NPLs; loans overdue by more than 90 days) were a moderate 3% of loans (largely unchanged from end-2017) and were fully covered by total reserves. Restructured loans added a further 2%. The bulk of problem loans (NPLs and restructured) was originated in the SME portfolio (the segment amounted to 9% of total loans), while problem loans in EB's corporate loan book (66%) and retail portfolio (25%) remained low’.
EB is funded by customer balances (88% of liabilities at end-2017) with the majority of funds raised from individuals (61% of the total). Corporate accounts are highly concentrated with one state-owned energy company comprising 24% of liabilities. Reported related-party funding is negligible. Buffer of highly liquid assets (cash and equivalents, net short-term interbank placements and placements with the Central Bank of Azerbaijan, including short-term bonds) remains sizeable, equal to a large 57% of customer funding at end-1Q18.