Russian rating agency RAEX (Expert RA) has affirmed its creditworthiness rating of B++ (satisfactory level of creditworthiness) on MFBank, with a stable outlook.
Among positive factors the agency pointed to acceptable rates of return and the low portion of NPLs in the aggregate credit portfolio (0.1% as of January 1, 2016) coupled with a modest proportion of loans of the third to fifth quality categories (5.6% as of January 1, 2016). The rating was also positively influenced by acceptable concentration of active operations on companies associated with the high credit risk, low concentration of funds drawn on big creditors and acceptable capital adequacy (as of January 1, 2016 N1.0 equaled 13.5%, while N1.2 and N1.1 were equal to 11.7%).
Primary negative factors are insufficiently balanced assets and liabilities by duration in the short-term horizon as of several balance sheet dates of 2015 (as of balance sheet dates from March 1, 2015 through May 1, 2015 N3 was under 60%), weak competitive positions in the regional banking market and non-optimal breakdown of the portfolio of loans granted to businesses, individual entrepreneurs and households (roughly 11% of loans were collateralized by real estate as of December 1, 2015).
The rating was restrained by a narrow set of market sources of extra liquidity and insufficiently balanced assets and liabilities by duration in the long-term horizon (as of January 1, 2016 N4 stood at 100%, while capital immobilization through I in property and poorly liquid securities equaled 60%).
"The bank is characterized by risks associated with imbalances between turnover on client accounts and assets (turnover accounted for roughly 350% of assets, on average, in 2015), and also heavy cash turnover. With such a big flow of client transactions, it may be difficult to monitor the compliance of requirements of the Federal Law "On Counteracting Legalization (Laundering) of Criminal Income and the Financing of Terrorist Acts", which impacts the rating adversely," RAEX managing director for banking ratings Stanislav Volkov commented.
