Russian rating agency RAEX (Expert RA) has affirmed Moscow Neftechemical Bank's creditworthiness rating of A+ (the very high level of creditworthiness, Sublevel 3). The rating carries a stable outlook.
The bank's rating was positively impacted by high capital adequacy and high ROE coupled with good coverage of operating expenses by net interest income and net commission income. The lender's rating is also supported by good credit portfolio coverage, well-balanced assets and liabilities by duration and the high quality of the securities portfolio.
"A primary constraining the bank's creditworthiness is still high concentration of active operations on businesses associated with the high credit risk (as of June 1, 2015 big credit risks against the assets, net of provisions, equaled 64.8%)," RAEX director for banking ratings Stanislav Volkov commented.
The bank's rating was adversely affected by its insufficiently conservative policy of making loan provisions and poor diversification of loans by industries. Moreover, the rating is under pressure from the high portion of loans of the 3rd and 4th quality categories in the credit portfolio, low reliability of insurance protection of the bank's own and collateralized property, and also its practice of granting foreign currency-denominated loans to borrowers that generate revenues in rubles only.
