International rating agency Moody's Investors Service has revised from stable to negative the outlook for Finprombank's long-term local currency and foreign currency deposit ratings, affirming the ratings at B3. At the same time, Moody's affirmed the lender's baseline credit assessment and adjusted baseline credit assessment at b3. The bank's short-term local currency and foreign currency deposit ratings were affirmed at Not Prime.
Furthermore, the bank's long-term and short-term counterparty risk assessments (which measures the likelihood of fulfillment by a financial institution of its contractual obligations, if it defaults) were affirmed at B2(cr) and Not Prime(cr), respectively.
As the agency's analysts noted, the downgrade of the outlook for the bank's deposit ratings reflects Finprombank's deteriorating asset quality due to its high "credit appetite", low loan loss provisions and a moderate capital cushion, which are insufficient in terms of the potential scope of loan losses, and a contraction in the bank's liquidity cushion coupled with high concentration of the funding base. soNormal>The upgrade of Pervobank's deposit ratings reflects the viewpoint of Moody's about the moderate probability for the bank to get support from Promsvyazbank, if need be. In turn, the affirmation of Pervobank's baseline credit assessment was stipulated by its moderate related indicators, while the bank's capitalization numbers are still limited by a high portion of non-core assets and weak financial results. Meanwhile, the lender's assessment is backed by balanced numbers of liquidity and funding, and also its strong business positions in the Samara region and business ties with such corporate clients as Novatek and other companies that are controlled by the bank's former shareholder Leonid Mikhelson, the agency noted in a press release.
