International rating agency Fitch Ratings has lowered its long-term issuer default ratings (IDR) on Bank Kedr from B to B-. The rating carries a negative outlook.
The rating downgrade reflects substantial deterioration of the lender’s creditworthiness since the last revision in April 2014. Deteriorated profitability and asset quality dampened the bank’s capital by 13% in the first half of the year. Based on Fitch’s estimates, if Bank Kedr continues to report losses at the same pace as in the first half of 2014 and its shareholders provide no fresh capital, the bank will spend its capital cushion in around six months.
The negative outlook reflects weak indicators of the lending institution which relies on external support in order not to spend its own capital. The agency also takes into account conditional risks of potential claims from the State Depositary Insurance Agency (DIA) with regard to some assets, which Bank Kedr received from the bankrupt bank directly before its default in March 2014.
