Russian rating agency RAEX (Expert RA) has revised its credit rating on Moscow-based SDM-Bank following changes in the methodology and assigned a ruA rating to the bank (which corresponds to the A+(III) rating under the earlier applied methodology). The stable outlook was set for the rating. The bank was previously rated at A+(I), with a stable outlook.
As the agency noted in a press release, the rating is backed by the bank's high capital adequacy ratios (as of March 1, 2017 N1.0 stood at 14.4%, while N1.1 and N1.2 were equal to 10.7%) and a solid liquidity cushion. The agency is upbeat about high coverage of the bank's credit portfolio and decent rates of return (ROE came in at 23.2% in 2016, while ROA stood at 2.8% in terms of profit after tax). The rating is still positively influenced by the bank's ability to draw extra funds via repurchase transactions and the low level of currency risks that it accepts.
The rating was pressured by the agency's more conservative assessment of the bank's asset quality and stability of the resource base under the new methodology, which was also driven by the non-optimum term structure of the resource base (as of March 1, 2017 around 83% of corporate funds fell to balances held on settlement accounts). The agency is pessimistic about the insufficiently balanced breakdown of the bank's assets and liabilities by duration in the long-term horizon, and also dependence of the resource base on retail funds (including of individual entrepreneurs) as a main source of funds.
