Russian rating agency RAEX (Expert RA) has revised Bank Saint Petersburg's credit rating owing to changes in the methodology, assigning a ruA rating (which corresponds to the A+(II) rating under the previously applied methodology). The stable outlook was set for the rating. The lender was previously rated at A+(I), with a stable outlook.
"The bank's rating was bolstered by its strong competitive positions in the Russian banking market, access to a wide range of sources of additional liquidity and low concentration of active operations on companies associated with the major credit risk," RAEX specified.
Also, the agency pointed to high coverage of operating expenses by net interest income and net commission income (252.4% in 4Q 2016), and coverage of the credit portfolio (as of March 1, 2017 the portfolio of collateralized loans issued to households, businesses and individual entrepreneurs, taking into account collateralized securities, sureties and guarantees, equaled 347.7%, and 129.6% excluding them).
If the probability of the bank's administrative support by state authorities remains high, as the agency thinks, the degree of the positive effect of this factor on the rating was revised.
The rating is pressured by the weak quality of credit and debt, and also by heightened vulnerability of core capital to the materialization of credit risks, the agency specified.
The bank's rating is also adversely affected by modest liquidity ratios excluding minimum total balances held on clients' demand accounts and with maturity of up to 30 days, the active practice of using collateral from the 1st to 2nd quality categories to decrease actual loan loss provisions, and also marginal rates of return.
