Russian rating agency AK&M has lowered its national scale creditworthiness rating on Moscow-based Trust Capital Bank from B+ to B. The rating carries a stable outlook.
As АК&М said in a press release, its analysts took account of a substantial decline in the bank's obligations, and also a contraction in assets and an increase in corporate overdue loans.
Trust Capital Bank's main sources of funding are traditionally funds of enterprises and institutions, and also issued promissory notes. Since the rating affirmation (the balance sheet date is October 1, 2014) funds of businesses declined 24.7% (Rub 249.1 mln), while promissory notes issued during the period under analysis sank 14.7x (10 times over the past four weeks) and accounted for just 2.7% of aggregate obligations.
Following a slide in the resource base Trust Capital Bank's assets fell, precisely, declined 29.6% to Rub 1.27 bln as of April 1, 2015. The aggregate amount of loans granted to businesses dropped 21.2% (Rub 194.4 mln), while corporate NPLs equaled 5.3% (up 1.4%). "All the more this is a negative factor in view of the fact that corporate loans constantly account for a bigger portion of Trust Capital Bank's profitable assets (roughly 57%)," the agency noted in a press release.
"The new development strategy yielded no results that Trust Capital Bank executives expected to achieve," analysts noted, adding that the bank's equity, in particular, not only grew less than planned, but contracted 4.7% in the past two months, and improvement in a number of other indicators, which AK&M took into account while taking its latest rating action, turned out to be short-lived.
As a risk factor the agency also pointed to frequent shareholder shakeups at the bank. Since October 2014 the bank's shareholding has undergone changes many times, and they resulted in virtually a full reshuffle (except for one shareholder) of the lending institution's shareholders. "Processes of this kind, as a rule, temporarily impair corporate governance and, as a consequence, poorer efficiency of the bank's activities," AK&M noted.
