International rating agency Moody's Investors Service has affirmed its long-term local currency and foreign currency deposit ratings on Probusinessbank at B3 and reduced the outlook for the bank's ratings from stable to negative.
The ratings correspond to the bank's baseline credit assessment affirmed at b3, and do not rule out additional notches driven by the possibility of external support. At the same time, Moody's affirmed the bank's short-term local currency and foreign currency deposit ratings at Not Prime.
In addition, the bank was assigned long-term and short-term counterparty risk assessments of B2(cr)/Not Prime(cr).
As Moody's noted, the reduced outlook for Probusinessbank's deposit ratings reflects, first, heightened risks for its credit portfolio, which stipulated fast deterioration of the bank's asset quality and profitability indicators. The agency also takes into account a drop in the bank's capital buffer. As the agency's analysts pointed out, due to the lending institution's substantial net loss under IFRS in 2014 and insufficient coverage of NPLs by the provisions, this factor points to the bank's weak ability to absorb losses.
Moody's also reported on its website that Probusinessbank's national scale rating was lowered to Baa3.ru.
Russian rating agency RusRating downgraded Probusinessbank's credit ratings in late April, The bank's international scale rating was cut from ВВВ- to ВB+, and the national scale rating from AA- to A+, and the outlook is possible downgrade.
The agency explained rating downgrades by the bank's growing sensitivity to deteriorating macroeconomic conditions amid rising dependence of its activity on speculative sources of income and the narrowing credit portfolio. The decision to reiterate the bank's rating outlooks at possible downgrade was driven by the low likelihood of the bank resuming active lending in the current macroeconomic conditions and boosting income.
Factors substantiating the rating are stable market positions of Probusinessbank and group Life nationwide, decent non-financial possibilities of the controlling shareholders to present the bank's interest before regulatory authorities, the lending institution's financial flexibility and efficient management system.
Rating constraining factors are the bank's high sensitivity to the current macroeconomic conditions, and also limited sources of capitalization growth, RusRating noted in a press release.
