S&P Global Ratings revised its outlook on Azerbaijan-based Kapital Bank OJSC to positive from stable and affirmed its 'BB-/B' long- and short-term issuer credit ratings, Report informs.

‘We expect the bank will continue expanding its retail portfolio in the coming years. In addition, we believe Kapital Bank will further strengthen its market leadership in system-wide retail loans and deposits in 2019-2020. We believe it will also maintain close relationships with a number of GREs, remaining their first-choice bank for keeping funds and taking loans in case of need. In our view, the bank will likely maintain a sufficiently high capital buffer, with a risk-adjusted capital ratio remaining of 7.8%-8.0% over the next 12-18 months’, the agency said.

According to S&P Global Ratings, loan portfolio growth will be 20%-30% in the next two years: ‘Furthermore, the bank will likely maintain solid profitability, with ROAE exceeding 25% over the forecast horizon, due to a sustainably high net interest margin (NIM), modest credit losses, and good operational efficiency. Kapital Bank’s asset quality is good and stronger than that of peers in Azerbaijan. In 2018, the bank reduced nonperforming loans (NPLs), with Stage 3 (under International Financial Reporting Standards) loans of 4.6% at year-end 2018, down from 7.1% a year ago. At the same time, the bank's stable funding ratio stood at 220% as of Dec. 31, 2018, while its loan-to-deposit metric was about 46%--both much stronger than peers’.