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|JSC Liberty Bank Issuer Default Rating||Rating||Outlook||Update Date|
|Fitch||B+||Stable||16 April, 2019|
|S&P||B/B||Positive||29 May, 2019|
|Moody's||B1||Positive||24 May, 2019|
Liberty Bank's profitability is strong, underpinned by still wide margins. Profitability was supported by improved operating efficiency and stable loan impairment charges on retail loans. Operating profit remained a solid. Capitalisation and leverage is a relative rating strength for Liberty Bank. The bank's funding and liquidity profile is a rating strength, in our view. The bank's liquidity was sufficient to cover a high 38% of customer deposits.
The positive outlook on Liberty Bank JSC reflects that we could raise our long-term rating in the next 12 months if we observe that the bank is able to develop a more diversified business without compromising its asset quality or capital buffers. We would consider taking a positive rating action if Liberty Bank improves its market positions by successfully developing a more diversified business by expanding its corporate business segment, in addition to its traditional focus on consumer lending. Any potential upgrade would be conditional on our assessment that the bank can deliver on its growth targets while maintaining solid profitability, good asset quality, and capitalization commensurate with the planned asset growth.
Liberty Bank's upgraded rating reflects its strong earnings generation capacity, which is driven by a high interest margin; adequate reported capital ratios that we expect will improve in line with higher requirements; and granular deposit funding base and solid liquidity. These strengths are moderated by high asset risks, reflecting the bank’s focus on unsecured lending and its credit concentration in Georgia’s developing economy; unseasoned risk for its new corporate lending book; and the bank's undiversified business model. However, the bank has a new strategy and is increasingly focused on business lending portfolio, which can shift some of these strengths and weaknesses.