International rating agency Standard & Poor’s has affirmed its counterparty credit ratings (the long-term rating of B- and the short-term rating of C) on Koltso Urala Bank. The ratings carry a stable outlook.
At the same time, the bank was assigned a national scale rating of ruBBB-. In short, the credit ratings assigned to the bank last September were affirmed.
As the rating agency said in a press release, the stable outlook reflects the agency’s opinion that the quality of the bank’s assets will remain stable in the next few quarters. “In particular, we anticipate the bank to pursue a stricter underwriting policy and lower growth of assets, which should be partly offset by growing risks of the retail lending market of the Russian banking sector," commented the press release’s authors.
At the same time, credit analysts say the bank’s current status could be raised. “We can upgrade Koltso Urala Bank’s long-term rating if the bank substantially and steadily improves its risk positions, i.e. if it keeps the asset quality level at the present low level, reduces the growth rate of asset growth and concentration of the credit portfolio to the banking sector’s average and shows no substantially drawbacks in the risk management policy and procedures," they pointed out.
On the whole, the experts think that the bank’s mid-term strategy, which is geared towards expansion in the retail lending segment, will remain unchanged. “Based on our estimates, in the next few years retail loans will account for around 60% of the aggregate credit portfolio," S&P forecasts.
To primary positive factors that affect the level of a rating (B-/Stable/C) the agency refers to a niche on the market in the Urals region, adequate liquidity and the favorable impact on the bank’s performance, as the bank is a subsidiary of M&M giant UGMK.
