Moody’s Investors Service today upgraded the Adjusted Baseline Credit Assessment to B3, Report informs.

The outlook is stable.

The upgrade of Bank Respublika’s BCA to B3 from Сaa1 reflects improvements in the bank’s profitability and asset quality.

Moody’s believes that Bank Respublika completed the provisioning of its legacy portfolio in 2018, and expects a normalization of provisioning charges at lower levels in 2019-20 which, together with improving pre-provision profitability, will translate into stronger net profits in the next 12 to 18 months. The asset quality improvement is driven by both amortization of the old portfolio and the increasing share of new lending disbursed under tighter underwriting standards, and the improving trend will continue as the loan book expands through 2019-20.

The stabilized economic conditions in Azerbaijan should benefit the creditworthiness of households and small and medium-sized entities, Respublika’s key customer segments.

Based on local GAAP reports, Respublika posted net income of AZN2.2 million in 2018, compared with a net loss of AZN10.5 million in 2017. Quarterly pre-provision income improved steadily to about AZN3.2m in Q3-Q4 2018 compared with an average of AZN1.2m in 2017.

“We are pleased that our measures to provide financial stability and development justified themselves. We are sure that new rating will strengthen bank’s position as one of more reliable and dynamically developing banks,” chairman of bank’s Supervisory Board Shakir Rahimov said.