Russian rating agency RAEX (Expert RA) has affirmed its creditworthiness rating of A (high creditworthiness) on Credit-Moscow and revised the rating sublevel from 2 to 3. The rating carries a stable outlook, which means the strong likelihood of the bank's rating remaining unchanged over the medium term.
Key factors producing a positive impact on the bank's rating include well-balanced assets and liabilities on the short-term horizon and high coverage of the credit portfolio. Furthermore, the bank's rating is supported by acceptable concentration of active operations on entities associated with the high credit risk and the high portion of securities that are on the Bank of Russia's Lombard List.
The rating sublevel cut was mainly driven by the deteriorating credit portfolio quality coupled with modest capital adequacy and low returns. "The bank's financial performance worsened, first and foremost, due to the high cost of funding, and deposit rate hikes in late 2014 and early 2015 put heavy pressure on the bank's net interest income," RAEX director for banking ratings Stanislav Volkov commented.
The negative trend, to a large extent, was sparked by deteriorating economic conditions in the country and is typical for the Russian banking sector, as a whole. Moreover, the bank's rating was adversely affected by the high proportion of equity, which were immobilized by property investments, and high sensibility of interest margin to the Bank of Russia's key rate adjustments.
