Russian rating agency RAEX (Expert RA) has cut creditworthiness ratings on Plyus Bank, Zemsky Bank and Housing Finance Bank to B++ (satisfactory level of creditworthiness), RAEX's press service reported.
Analysts also lowered Plyus Bank's rating outlook from stable to negative.
"The rating downgrade was mainly driven by a decline in capital adequacy ratios and, as a consequence, sharp growth of vulnerability to asset impairment (from July 1, 2016 through November 1, 2016 N1.2 dropped from 8% to 6.6%. As a result, as of November 1, 2016 full impairment of 1% of the bank's loans due may bring down the core capital adequacy ratio to the minimum regulatory threshold), and also by higher sensitivity to the terms of raising short-term funding as part of repurchase transactions with a centralized counterparty," said the press release.
Analysts think that the key positive factor is the high likelihood of Plyus Bank gaining support from its shareholders through a capital injection and provision of additional liquidity.
Zemsky Bank carries a stable outlook. "The downgrade of the rating outlook (at Zemsky Bank – editorial note) reflects the agency's expectations about tighter regulation of related-party lending if the bank lends a lot to borrowers that have some features of being affiliated with it. Meanwhile, the bank sees low capital adequacy cushion (credit portfolio impairment by more than Rub 150 mln without a drop in risk-weighted assets may lead to the violation of the N1.2 ratio) and high concentration of the credit risk (claims to 20 largest groups of borrowers formed 59% of the portfolio of loans granted to households, businesses and individual entrepreneurs as of October 1, 2016) amid signs that the bank's provisions policy are not quite conservative," RAEX claimed.
The most substantial positive factor is Zemsky Bank's financial support by its owner.
The downgrade of Housing Finance Bank's rating was primarily driven by a contraction in the cushion of high-liquidity assets compared to 2015 (as of November 1, 2016 the ratio between high-liquidity assets and borrowed funds (net of subordinated loans) equaled 5.7%, and the 2015 average is 11%) and the bank's unprofitable activities in 2016 due to rising provisions against mortgage loans that pushed down the bank's capital adequacy ratios, RAEX noted. Meanwhile, experts left the bank's stable rating outlook.
"Key factors producing a positive impact on the rating include the bank's firm competitive positions in the Russian banking market in the segment of mortgage lending…, low concentration of drawn funds on the biggest creditors, the mortgage portfolio's low LTV ratio amid low concentration of credit risks and good data on debt recovery, and the adequate scope of activities," the press release pointed out.
