Fitch Ratings has assigned long-term issuer default ratings of B to Pervobank. The ratings carry a stable outlook.
Pervobank’s core capital ratio, according to Fitch’s methodology, was moderate, equaling 8.1% as of late June 2014. The bank’s regulatory total capital adequacy ratio was slightly worse, 11.1% as of late September 2014. This means that the bank was able to withstand additional loan losses equal to just 1.8% of all loans.
Pervobank’s capitalization is also adversely affected by weak capital generation through profit and substantial risks associated with its non-core assets and loans issued to the developer sector.
Pervobank’s ratings could be upgraded if the bank’s profitability improves dramatically, sources of funding are diversified and non-core assets are reduced. The ratings could be lowered in case of substantial deterioration of asset quality, liquidity positions or capitalization. The bank’s weakening ties with affiliated entities, especially with Novatek and Sibur, which would lead to a sharp outflow of deposits, could also result in rating downgrades.
