Fitch Ratings downgraded the long-term issuer default rating of Azerbaijan's Accessbank from 'BB+' to 'BB-' with a stable outlook on September 6, while affirming its viability rating at 'f'.

One of Azerbaijan's 10 largest banks, Accessbank is in part owned by international financial institutions (IFIs), namely the European Bank for Reconstruction and Development (EBRD), the International Finance Corporation (IFC) and the Black Sea Trade and Development Bank (BSTDB). Each has a 20% stake in the lender. Germany's development bank KfW also retains a stake. Accessbank is the leading microfinance lender in the country, and an important lender to small and medium enterprises (SMEs).

The rating downgrade was prompted by a re-evaluation of the likelihood of support from the lender's IFI shareholders in light of the weak recent track record of capital support and the bank's poor financial results, which cast doubt over its future performance prospects, Fitch explained in a report.

Acceessbank has been incompliant with prudential capital requirements since the beginning of the year and has relied on regulatory forbearance. In March, shareholders provided $20mn in equity and committed to inject another $12mn by end-September to raise the bank's capital above the regulatory minimum of AZN50mn ($29.6mn). However, these amounts are likely to be insufficient, the report added, given the bank's H1 losses of AZN43mn. Mainly due to high impairment-related expenses, the lender would still have been loss-making without them due to reduced loan issuance, tight margins and high operating costs, Fitch continued.

Accessbank's capital position will remain further vulnerable due to its large portfolio of non-performing loans, which amount to AZN71mn, Fitch concluded.