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Rating Action: Moody's affirms ratings of two Armenian banks; changes outlooks to negative following change of sovereign outlookGlobal Credit Research - 29 Mar 2022London, March 29, 2022 -- Moody's Investors Service ("Moody's") has today affirmed Ameriabank CJSC's (Ameriabank) Baseline Credit Assessment (BCA) of b1 and its Ba3 long-term deposit ratings as well as Converse Bank CJSC's (Converse Bank) BCA of b2 and long term deposit ratings of B1. The outlooks on these banks' long-term deposit ratings were changed to negative from stable.A full list of the bank's ratings affected by today's rating action is at the end of this press release.The rating action follows Moody's decision to affirm Armenia government's long-term issuer ratings of Ba3 and change its outlook to negative from stable on 24 March 2022. For further information on the sovereign rating action, please refer to Moody's press release: https://www.moodys.com/research/--PR_463997. RATINGS RATIONALE BANK-SPECIFIC FACTORS Ameriabank CJSC (Ameriabank) The rating affirmation and change of outlook to negative from stable reflects the negative outlook on the Armenian government issuer rating which will result in a lower ability to support Ameriabank's b1 BCA in the event of a downgrade of the Armenian government's issuer rating. Ameriabank's local currency deposit rating is Ba3 and benefits from a one notch of support uplift due to our assessment of high probability of government support for the bank's deposits, reflecting its systemic importance as the largest bank in Armenia.Ameriabank's BCA reflects its (1) strong business franchise which supports its solid liquidity and a diversified funding base, with customer deposits accounting for about 62% of its total liabilities, (2) good loss-absorption capacity underpinned by a satisfactory capital position and robust pre-provision income (about 3% of average total assets as of March 2021) which provides a good buffer for absorbing rising credit losses, per Moody's expectations, and (3) relatively moderate asset risks, reflecting substantial exposure to household and consumer loans and still-high although decreasing proportion of foreign currency loans to total loans which exposes the bank and its clients to foreign exchange risk.Converse Bank CJSC (Converse Bank)The rating affirmation and change of outlook to negative from stable reflect Moody's assessment of a moderate probability of government support for Converse Bank's deposits, which results in one notch of rating uplift above the bank's b2 BCA. The negative outlook on the Armenian government debt rating indicates the government's lower ability to support the b2 BCA in the event of a downgrade. Converse Bank's local currency deposit rating is B1.The bank's BCA reflects its (1) good loss-absorption capacity supported by sold capital buffers with a tangible common equity ratio of about 14% at end of September 2021, (2) stable funding profile, supported by relatively long-term funding from international financial institutions and a modest reliance on market funds at 19% of banking assets, and (3) relatively high assets risks, with a problem loans ratio of 7.2% as of end of September 2021, reflecting its large stock of foreign-currency loans and retail loans.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSA downgrade of the credit rating of Armenia would exert downward pressure on the banks' ratings, in view of the weakening capacity to support banks. The affected banks' deposit ratings could also be downgraded if their solvency or liquidity were to deteriorate materially beyond our current expectations amid further weakening of the operating conditions.Upgrades of these banks' ratings are unlikely in the next 12 to 18 months given the unfavorable operating conditions in the country and the negative outlook. However, the ratings can be stabilised if the operating environment improves, and banks maintain their resilient financial performance. LIST OF AFFECTED RATINGS ..Issuer: Ameriabank CJSC Affirmations: ....Adjusted Baseline Credit Assessment, Affirmed b1....Baseline Credit Assessment, Affirmed b1....Long-term Counterparty Risk Assessment, Affirmed Ba3(cr)....Short-term Counterparty Risk Assessment, Affirmed NP(cr)....Long-term Counterparty Risk Ratings, Affirmed Ba3....Short-term Counterparty Risk Ratings, Affirmed NP....Long-term Bank Deposit Ratings, Affirmed Ba3, Outlook Changed To Negative From Stable....Short-term Bank Deposit Ratings, Affirmed NPOutlook Action:....Outlook, Changed To Negative From Stable..Issuer: Converse Bank CJSCAffirmations:....Adjusted Baseline Credit Assessment, Affirmed b2....Baseline Credit Assessment, Affirmed b2....Long-term Counterparty Risk Assessment, Affirmed B1(cr)....Short-term Counterparty Risk Assessment, Affirmed NP(cr)....Long-term Counterparty Risk Ratings, Affirmed B1....Short-term Counterparty Risk Ratings, Affirmed NP....Long-term Bank Deposit Ratings, Affirmed B1, Outlook Changed To Negative From Stable....Short-term Bank Deposit Ratings, Affirmed NPOutlook Action:....Outlook, Changed To Negative From StablePRINCIPAL METHODOLOGYThe principal methodology used in these ratings was Banks Methodology published in July 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1269625. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entities or their designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Peter Mushangwe Asst Vice President - Analyst Financial Institutions Group Moody's Investors Service Ltd. One Canada Square Canary Wharf London, E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Yaroslav Sovgyra, CFA Associate Managing Director Financial Institutions Group JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Releasing Office: Moody's Investors Service Ltd. 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