Russian rating agency RAEX (Expert RA) has downgraded Ivanovo-based Kranbank's creditworthiness rating of В++ (the acceptable level of creditworthiness) and set a stable rating outlook. Previously the bank was rated at A (the high level of creditworthiness), with a stable outlook.
As the agency noted, the rating was lowered, to a large extent, following the ownership shakeup as in the first quarter of 2015 a 24.4% interest in the bank was acquired by the lender's management, and the agency has no information about possibilities of the new owners to support the bank financially. The deteriorating asset quality (the portion of 4th and 5th category loans rose from 2.5% to 5.9% in April) and a decline in the bank's net interest income also played a role.
"Higher allocations to the provisions in 2015 resulted in a loss of Rub 26.8 mln in 1Q. This April the bank continued to pile up provisions (also around Rub 62 mln of losses for the month). The agency expects the bank's interest income to rise moderately if expenses related to retail deposits remain high, which will continue to put pressure on ROE in 2015," RAEX director for banking ratings Stanislav Volkov pointed out.
