Moody's upgrades long-term deposit ratings of IBA-Moscow

Moody's Investors Service has upgraded IBA-Moscow's (IBAM) long-term local- and foreign-currency deposit ratings to B2 from B3, adjusted baseline credit assessment (BCA) to b2 from b3 and the long-term Counterparty Risk Assessment (CR Assessment) to B1(cr) from B2(cr).

The outlook on long-term deposit ratings remains stable.

This rating action primarily reflects Moody's revision of the bank's affiliate support from its immediate parent -- International Bank of Azerbaijan (IBA; deposits Ba3 stable, BCA b3), which - together with IBAM - received financial support from government of Azerbaijan in the frame of the IBA group rehabilitation plan.

IBAM's credit profile has been bolstered by a Tier 1 equity injection in Q2 2016 from the parent bank that amounted to RUB2.0 billion. This contribution was the largest in the last five years and increased Tier 1 capital by c.70%. As a result, as of 1 September 2016, IBAM reported a Basel III statutory total capital adequacy ratio (N1.0) and Tier 1 ratio (N1.2) of 22.4% and 8.3%, respectively, well above the CBR thresholds. Moody's expects additional capital injection and toxic asset repurchase by the parent bank in the next 12-18 months.

IBAM's ratings could be upgraded in case of further reduction of problem lending along with a recovery of the bank's profitability, or deposit ratings upgrade of the bank's parent IBA.