Russian rating agency RAEX (Expert RA) has lowered its creditworthiness rating on Vologda-based Promenergobank to C++ (very low level of creditworthiness (pre-default)). The bank was previously rated at B+ (quite low level of creditworthiness). The negative rating outlook was left unchanged, and the bank remains under watch.
The rating downgrade and keeping the bank's negative rating outlook were driven, above all, by a decline in the bank's equity below its charter capital (the charter capital exceeded the bank's equity by Rub 184 mln as of July 1, 2016) following asset impairment, analysts noted. Also, in June the lending institution violated the capital adequacy ratio (N1.0 stood at 5.97% as of June 27 and 6.19% as of June 28). This substantially increased regulatory risks associated with the bank.
In addition, the agency pointed to the vulnerability of the liquidity cushion to an outflow of funds drawn (N3 equaled 51.6% as of July 1, 2016) and the bank's insufficiently balanced assets and liabilities in the long term (as of the balance sheet date N4 equaled 94.3%, and 187% of capital was immobilized by assets and other low liquidity assets).
The bank's rating is also constrained by high concentration of active operations on companies associated with the high credit risk (as of early July the ratio between big credit risks, net of provisions, equaled 62.3%) and the de-concentrated ownership structure (not a single owner holds more than 10% of the bank's capital).
The rating is positively influenced by acceptable coverage of the credit portfolio (as of early July 2016 the total credit portfolio, including collateralized securities, sureties and guarantees, was covered by 273%, and by 113.7% excluding these components) and the low level of accepted currency risks. Also, the bank takes a number of measures to maintain creditworthiness (to take out a subordinated loan, to sell non-core assets, to deal with troubled debt, to assign the rights of claim under some assets), which prompted the agency to leave the rating under watch, analysts pointed out.
