The rating upgrade reflects MBC’s transformation into a microbank. As a microbank, MBC is now subject to more stringent regulatory requirements, which strengthens its creditworthiness.

Scope Ratings has updated its rating report on JSC MFO Micro Business Capital, rated B with Positive Outlook.

The Outlook revision factors MBC’s overhaul of its risk management capabilities as it strives to transition into a microbank.

The downgrade reflects the erosion of capital adequacy metrics as well as volatile earnings.

The change in Outlook reflects the more difficult operating environment, the higher refinancing costs and their impact on profitability, and the tighter capital and liquidity positions.

No action has been taken following the monitoring review.

The affirmation reflects Scope's view that the company's credit profile has remained resilient throughout the pandemic crisis.

Scope has completed JSC MFO Micro Business Capital monitoring review.

The rating is driven by MBC’s adequate financial, regulatory and credit metrics despite a comparatively minor market position in the Georgian microfinance sector.