OREANDA-NEWS. December 24, 2010. Standard & Poor’s has revised its outlook on the rating of Azerbaijan’s AGBank from ‘Stable’ to ‘Negative’.

The Agency informs that at the same time it confirmed credit ratings - long-term ’B-’ and short-term ’C’.

"The outlook revision is conditioned with our concern with possible further quality deterioration of AGBank’s assets, as well as continuing pressure on the profitability of its operations. At that, we take into account adequate indicators of AGBank’s capitalization and stable composition of its shareholders. Then ratings of AGBank reflect as previously the high level of economic and branch-wise risks in Azerbaijan (BB+/Positive/B), and weak credit solvency of this Bank, limited coverage of the client market and high concentration of loan portfolio and resource base," it was reported.

In S&P’s opinion, AGBank is not large privately owned commercial bank, which occupies the 10th place in the Azerbaijani banking sector (its assets by 30 September 2010 amounted to 249 million manats or USD 311 million). The main customer base consists of small and medium-size businesses (commercial, industrial and construction ones), and private persons with average and medium-high income.

"The ratings reflect the creditworthiness of AGBank and do not include additional steps for the opportunity to receive urgent external support. The Bank is owned by 50.5% by citizen of Azerbaijan Chingiz Asadullayev and his business partner and is controlled by them. Among the minority shareholders are the International Finance Corporation (IFC); AAA/Stable/A-1+, 17.5%) and US-based investment fund Kazimir Investment LTD (no rating; 10%).

"Outlook ‘Negative’ reflects our concern with possible further worsening of quality of Bank’s assets and the continuing pressure on the profitability of its current operations,” it was informed.