BAKU

Kapital Bank, Azerbaijan’s oldest bank and one of its top three commercial lenders, said net profit slumped by more than a third in the first half of the year as the COVID-19 curtailed economic activity.

The bank reported a net profit of 99.772 million manats ($58.7 million) in the first half of 2021, a decline of 41.5 percent from the same period in 2020.

Kapital Bank’s assets amounted to 5.7 billion manats, up 9.3 percent from January-June 2020. Liabilities rose by 12.1 percent, amounting to 5.2 billion manats.

The bank’s loan portfolio rose by 5.6 percent to 2.3 billion manats, it said. The bank increased its portfolio on consumer lending by 5.1 percent to 1.4 billion manats. The volume of deposits totalled 4.4 billion manats, 15.9 percent more than in the first half of the last year.

The bank’s capital decreased by 11.3 percent to 563.3 million manats.

In April, Moody’s adjusted the Baseline Credit Assessment (BCA) of Kapital Bank at b1 and affirmed its long-term local and foreign currency deposit ratings at Ba3.

The agency also changed Kapital Bank’s outlook on the long-term local and foreign currency deposit ratings to “positive” from “negative.”

Moody’s said that those ratings reflected the healthy performance of the loan book as well as strong net profit and capital cushion.

“The change of outlook on the bank’s local and foreign currency long-term bank deposit ratings to positive from negative reflects the expected improvement of the bank’s standalone credit profile in the next 12-18 months,” the agency said in a statement.

For a number of years, Kapital Bank’s loan book has been of better quality than that of its peers, given the bank’s focus on its existing deposit clientele, including payroll customers, budget recipients and pensioners, it said.

As of year-end 2020, the share of problem loans accounted for 3.3 percent of gross loans, down from 4.6 percent in 2019.

“Moody’s expects that the bank’s capital adequacy will remain broadly stable over the next 12-18 months, with the bank’s solid internal capital generation balanced against its relatively high dividend payout ratio,” the agency said.

Kapital Bank’s shareholders are PASHA Holding (99.8755 percent) and individuals (0.1245 percent).