JCR Eurasia Rating has evaluated Creditwest Bank Ltd. in a high level investment category and affirmed ratings of ‘AA+(Trk)’ on the Long Term National Scale and ‘BBB-(Trk)’ on the Long Term International Foreign Currency and Local Currency Scales along wi

JCR Eurasia Rating has evaluated Creditwest Bank Ltd in a very high level investment category and affirmed the ratings of ‘AA+(Trk)’ on the Long Term National Scale along with a Stable outlook. On the other hand, the Long Term International Foreign and Local Currency Ratings have been affirmed as “BBB-“ in line with Turkey’s sovereign ratings. Other ratings are notes are provided in the table below.

Long Term International Foreign Currency

:

BBB- /(Stable Outlook)

Long Term International Local Currency

:

BBB- /(Stable Outlook)

Long Term National Local Rating

:

AA+ (Trk) /(Stable Outlook)

Short Term International Foreign Currency

:

A-3 /(Stable Outlook)

Short Term International Local Currency

:

A-3 /(Stable Outlook)

Short Term National Local Rating

:

A-1+(Trk)/(Stable Outlook)

Sponsor Support

:

2

Stand Alone

:

A

Creditwest Bank maintained a successful performance throughout FY2014 as in the previous year and achieved above sector-average results with respect to growths in assets, loans, equity, deposits and rise in profitability. Resuming its sustainable growth trend without compromising its productivity and asset quality, the Bank has reached the position of the second largest bank based on asset size in a 22-bank sector as of FYE2014. The consistently narrowing net interest margin and relatively high rise in operating expenses continued to exert downward pressure on the profitability ratios throughout FY2014. However, the profitability ratios of the Bank maintained an above sector average level under such circumstances. The Bank strengthened its equity via a high internal equity generation capacity supported by sustainable revenue streams and retention of a large part of generated internal resources. However, the Bank’s Capital Adequacy Ratio remained below the sector average despite exhibiting an improvement in comparison to the previous year and maintenance of a level of significantly above legal requirements.

It is anticipated that the Bank’s current level of capitalization and liquid assets stands at a level that could withstand volatility in macro-economic indicators along with losses arising from contingent and moderate systemic risks. Despite the pressures exerted on the Bank’s liquidity management by deposit maturities less than 3 months observed throughout the sector, widespread deposit customer base and deposit roll-over rates and low deposit-to-loan ratio contributes to liquidity management to a certain extent.

While the Bank’s non-performing loans (NPL) ratio was somewhat above the reference values, the improvement which began in FY2013 was maintained throughout FY2014 and fell below the sector average level. In addition to the growth of the Bank’s loan portfolio, successful collections from the impaired loans portfolio and the limited amount of loans transferred to it were the major factors that supported the improvement in the NPL ratio. Furthermore, the provisioning for a large part of low-quality assets is a factor that contributed to the asset quality. The Bank’s rational organizational structure, effective and successful management practices, standardized work procedures and the relatively high level of corporate governance practices have been evaluated as other positive factors.

The restrictive structural risk factors stemming from The Turkish Republic of Northern Cyprus’s status as a small island nation along with its economic and political isolation continue to represent major hurdles for both the sector and Creditwest Bank. The recent acceleration in the peace negotiations between the Turkish and Greek nations across Cyprus and possible finalization of peace talks are anticipated to make a contribution to the island’s economy and banking system.

The financial strength and willingness of the shareholders to support the Bank has been assigned as (2) while the capability to manage the incurred risks regardless of the shareholder support has been assigned as (A). The (A) grade in the Stand Alone grade denotes “the highest” grade on JCR Eurasia Rating’s notation system, indicating an ability to comfortably meet its liabilities without external support whilst the (2) grade in the Sponsor Support category denotes a “sufficient” level of external support.

For more information related to the rating results you may visit our internet site http://www.jcrer.com.tr or contact our analyst Mr. Şevket GÜLEÇ.

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