...OJSC International Bank of Azerbaijan's (IBA) ratings are driven by its intrinsic credit strength, as measured by its Viability Rating (VR; bb-). IBA's VR captures the bank's solid balance-sheet structure, which translates into satisfactory financial metrics. The VR also reflects the bank's strong domestic franchise, which benefits from its close ties with the state. The rating strengths are balanced with IBA's exposure to the emerging, oil -dependent and heavily dollarised Azerbaijani economy, which may result in significant cyclicality in the bank's asset quality and performance. Legacy Currency Risks: In July, IBA closed its long-standing short-currency position (OCP; 1Q22: USD470 million, or 60%, of regulatory capital) through purchases of foreign-currency liquidity from the Central Bank of Azerbaijan (CBA), thereby eliminating significant legacy currency risks. Fitch views the elimination of currency risks as the final step in a decisive resolution of the legacy issues that had previously...
