December 29, 2011 |
|Primary Credit Analyst: Maria Malyukova, Moscow, (7) 495-783-4135; email@example.com |
Secondary Contact: Natalia Yalovskaya, Moscow, +7495 783 4097; firstname.lastname@example.org
Additional Contact: Financial Institutions Ratings Europe; FIG_Europe@standardandpoors.com
• We are assigning 'B-/C' counterparty credit ratings and a 'ruBBB' Russia national scale rating to InterProgressBank (IPB). The outlook is stable.
• The ratings on IPB reflect the 'bb' anchor for a commercial bank operating only in Russia, our assessment of its weak business position, weak capital and earnings, moderate risk position, average funding, and adequate liquidity.
• The stable outlook balances our view of the bank's currently limited customer franchise and rapid loan growth with its recently augmented capital and stable customer deposit base.
MOSCOW (Standard & Poor's) Dec. 28, 2011--Standard & Poor's Ratings Services said today it assigned its 'B-' long-term and 'C' short-term counterparty credit ratings to Russia-based InterProgressBank (IPB). We also assigned a 'ruBBB' Russia national scale rating. The outlook is stable.
The ratings on IPB reflect its "weak" business position, "weak" capital and earnings, "moderate" risk position, "average" funding and "adequate" liquidity, as our criteria define these terms. The stand-alone credit profile (SACP) is 'b-'.
Under our bank criteria, we use our Banking Industry Country Risk Assessment (BICRA) economic and industry risk scores to determine a bank's anchor, the starting point in assigning an issuer credit rating. The anchor for a commercial bank operating only in Russia is 'bb'.
Our "weak" assessment of IPB's business position is based on the bank's limited market share and customer franchise, which is focused on small and midsize enterprises (SMEs) in the Moscow region. With total assets of Russian ruble (RUB) 15 billion ($500 million) as of Dec. 31, 2010, IPB is a small bank ranking No. 167 among Russian banks by assets. The bank has a stable core customer base made up of state organizations, hospitals, and companies domiciled in the southern administrative district of Moscow.
We project that the bank's risk-adjusted-capital (RAC) ratio before adjustments for diversification will be about 5% at year-end 2011, taking into account the capital increase of RUB500 million in February 2011.
We assess IPB's risk position as "moderate" given the bank's rapid loan growth and high single-name loan concentrations. Loan leverage increased from 35% of assets at year-end 2010 to 60% as of Oct. 1, 2011, due to a selldown of the securities portfolio. IPB's funds mainly consist of customer deposits, among which 65% were corporate and 35% retail as of Nov. 1, 2011. A high portion of corporate funds are demand accounts (about 70%), which is mitigated, in our view, by the stable historical customer base.
The issuer credit rating includes no uplift for extraordinary external support, either from shareholders or the government. In our view, the bank has "low" systemic importance in Russia's banking sector.
The stable outlook balances our view of the bank's limited customer franchise and rapid loan growth, given the recently increased capital and a stable customer base.
We would consider a positive rating action if the bank strengthens its business position, improves its capital adequacy above a 5% RAC ratio through additional capital injections and/or retained earnings, while maintaining adequate asset quality and stable funding.
We would consider a negative rating action if the Russian financial market deteriorates, if the bank lends significantly to related parties, if single-party loan concentrations increase, if asset quality deteriorates, or if capital adequacy deteriorates with the RAC ratio dropping below 3%. Deterioration in funding and liquidity, either through a significant outflow of deposits or a reduction in the proportion of liquid assets to total assets could also trigger a negative rating action.
|Full company name||"INTERPROGRESSBANK" (Joint-stock company)|
|Country of risk||Russia|
|Country of registration||Russia|