Russian rating agency RAEX (Expert RA) has cut Moskovsky Neftehemichesky Bank's creditworthiness rating to A (high level of creditworthiness, Sublevel 1), with a stable outlook. Previously the bank was rated at A+ (very high level of creditworthiness rating, Sublevel 3), with a stable outlook, the agency noted in a press release.
The rating action was driven, above all, by the worsening credit portfolio quality (from January 1, 2015 through October 1, 2015 the proportion of NPLs in the portfolio of loans issued to businesses and individual entrepreneurs rose 3% to 4.8%) and growing concentration of active operations on companies that are subject to high credit risks (from January 1 to October 1, 2015 big credit risks, net of provisions, jumped 5.4% to 72%).
Also, the bank's rating is still under pressure from its insufficiently conservative policy of forming provisions against loans and low diversification of loans by industries, analysts noted.
Factors producing a positive impact on the rating are the high capital adequacy ratio (as of October 1 N1.0 equaled 14.7%, while N1.1 and N1.2 were equal to 12.2%), high security of the credit portfolio and solid coverage of operating expenses by net interest income and net commission income. The rating is also backed by well-balanced assets and liabilities by duration, and the high portion of securities that are on the Bank of Russia's Lombard List.
