The outlook was changed to negative from stable.
Moody`s downgraded VTB Bank`s (Azerbaijan) (VTBAZ) BCA to caa1 from b2 and long-term deposit ratings to B2 from B1 with a negative outlook.
Moody`s downgraded OJSC Bank of Baku`s BCA to b3 from b1 and the long-term deposit ratings to B3 from B1 with a negative outlook.
The agency also downgraded Unibank`s BCA to b3 from b2 and the long-term deposit ratings to B3 from B2 with a negative outlook.
The rating actions reflect the negative impact of the depreciation of the Azerbaijani manat on the banks` asset quality, profitability and funding after the introduction in December 2015 of a free-floating exchange rate regime, as well as heightened dollarization of the banks` funding profiles.
Conversely, improvements in the Azerbaijan operating environment and/or banks` demonstrated resilience could enable a return to stable outlooks on the ratings, Moody`s said.
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