Baku, Azerbiajan, May 21
By Fakhri Vakilov – Trend:
S&P Global Ratings confirmed the long-term and short-term credit ratings of the issuer of the Uzbek JSCMB Ipoteka Bank at the level B+/B, the forecast is “Stable”, Trend reports with reference to the agency.
Joint-Stock Commercial Mortgage Bank Ipoteka Bank’s rapid business growth continues from participation in a number of government-sponsored programs and development of its business with small and midsize enterprises (SME).
S&P states that although the bank has maintained relatively good asset quality in past years, still-high single-name concentrations in its loan book and historically aggressive lending growth constrain our assessment of its risk profile, reads the message.
The agency notes that the Stable outlook reflects a low likelihood of a significant change in the credit profile of Ipoteka Bank in the next 12-18 months and the expectations that the bank will maintain strong ties with the state.
S&P expects that in the next one or two years Ipoteka Bank will continue gradually improving the granularity of its loan book in the next one to two years, as the bank expands its mortgage business and SME lending.
In particular, in accordance with the agency, the share of mortgage loans will increase to 20-25 percent of its loan book in the next two years, while the share of top-20 loans reduce to 40-45 percent, which is better than the system average, but remains high in an international context.
S&P could revise the outlook to positive in the next 12-18 months if Ipoteka Bank moderated credit growth to no higher than the system average. Prudent capital and liquidity management is also necessary in considering a positive outlook.
On the other hand, S&P could revise the outlook to negative or lower ratings if the bank expands significantly more than the agency currently expect, Similarly, the agency could consider a negative rating action if the bank’s high asset growth puts pressure on its risk profile and liquidity position.
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