Moody’s cuts Azerbaijani banks’ BCAs, deposits

Moody's Investors Service downgraded the baseline credit assessments and long-term local- and foreign-currency deposit ratings of OJSC XALQ Bank, JSC Bank Respublika, OJSC Bank of Baku and VTB Bank (Azerbaijan).

The outlooks on the long-term local- and foreign-currency deposit ratings of all four banks remain negative.

Moody’s said the actions reflect worsened financial fundamentals of Azerbaijani banks amid prolonged unfavorable operating conditions and the negative impact from local currency devaluation, in particular significantly deteriorated asset quality, net losses due to heightened credit costs and/or foreign exchange losses, materially eroded capital buffers and vulnerable funding and liquidity.

Funding conditions for Azerbaijani banks have been constrained by very high level of deposit dollarization, a lack of local-currency liquidity, volatile customer deposit base and limited and costly access to capital markets.

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