Russian rating agency RAEX (Expert RA) has assigned to K2 Bank a creditworthiness rating of В++ (the satisfactory level of creditworthiness), with a negative rating outlook, which means the strong likelihood of the bank's rating being downgraded over the medium term. Key factors that affected the rating positively are the bank's high returns excluding income derived from assets provided for free and modest concentration of funds drawn on the largest group of creditors.
The bank's rating is backed by its strong competitive positions in the bank guarantee market and the good quality of guarantees and sureties granted. Among positive factors the agency highlights well diversification of assets and liabilities over the long term.
The rating is pressured by modest capital adequacy and increasingly low coverage of the credit portfolio. The agency pointed to the bank's aggressive guarantee-granting policy, while the bank is marked by low coverage of issued guarantees and sureties by highly liquid assets.
"The large portfolio of valid guarantees raises the risk of a sharp decline in highly liquid assets if the bank is requested to fulfill these obligations in full that could in the medium term put pressure on the bank's liquidity," RAEX director for banking ratings Stanislav Volkov commented.
According to RAEX, the rating is constrained by the bank's narrow area of operation.
