International rating agency S&P Global Ratings has affirmed Rusfinance Bank's long-term and short-term counterparty ratings at BB+/B, and the bank's national scale rating was affirmed at ruAA+. The ratings carry a negative outlook.
The rating agency noted in a press release that it assesses Rusfinance Bank's business position as "moderate". This reflects, on the one hand, the bank's focus on Russian auto and POS lending markets where it ranks third and fifth, respectively. On the other hand, the bank commands just around 1% of the Russian retail lending market (as of end 2016), analysts specified. Moreover, the assessment reflects deteriorated economic conditions in Russia that have produced an adverse impact on new loans, rates of return and asset quality over the past three years.
Meanwhile, the agency finds Rusfinance Bank's capitalization and rates of return as "very strong" in structural terms. Analysts take into account the fact that the bank's equity includes tier 1 capital. They expect the lender's risk-adjusted capital (RAC) to remain far above 15% over the next 12-24 months (16.4% in late 2015). S&P specified that in the January-September period of 2016 the bank's IFRS profit totaled Rub 1.2 bln, while ROA came in at 1.7%, and ROE equaled 6.8%.
Analysts explain the fact that Rusfinance Bank's long-term credit rating is three notches higher than its creditworthiness indicators (b+) by the bank's status of a Societe Generale Group subsidiary of high strategic importance. "Despite a contraction in the scope of business in 2014-2016, Russia is still one of the biggest international markets for Societe Generale, and the group says it stands ready to bolster operations of Russian subsidiaries," S&P said.
The negative outlook for Rusfinance Bank ratings reflects negative changes in the economic risk in the Russian banking sector, and also pressure on the lending institution's capitalization and profitability over the next 12 months, said the press release.
