Expert RA upgrades Credit Bank of Moscow’s rating to ruА as its asset quality improves
26 April 2019 — Expert RA has upgraded Credit Bank of Moscow’s (CBM) credit rating to ruА, stable outlook.
The rating was upgraded to reflect the Bank’s asset quality improvement and, as a result, the decrease in pressure on its capital. Other rating components — business profile, profitability and capital adequacy, liquidity position and corporate governance — stayed the same.
According to the Agency, the share of problem loans decreased to 3.8% of the corporate portfolio from 11.9% as at 01.04.2018, with the high operating income allowing the return on equity to remain at a high level (the after-tax RAS income-based ROE reflecting subsequent events was 10.9% in 2018).
«We appreciate the Agency’s work in respect of detailed evaluation of our Bank’s performance. In the last year we successfully implemented a number of measures to improve the loan portfolio quality. Expert RA formerly noted positive changes in the Bank’s asset quality, and in 2018-2019 observed development in the situation applying a conservative approach to risk assessment. The rating upgrade was another sign that we have chosen the right strategy,» noted Vladimir Chubar, the Chairman of the Management Board.
Assessing other rating components, the Agency’s analysts noted that
- A moderately high evaluation of the business profile is determined by the Bank’s strong competitive positions in lending and cash management of large businesses, including strategically important enterprises, which acknowledges the Bank’s high value on the federal level.
- The Bank's return on equity is high with relatively low interest margin which is put under material pressure of the significant percentage of low-profit and low-risk assets on its balance sheet.
- The Bank has good ability to raise additional liquidity.
- The corporate governance level, according to the Agency, matches scale of the Bank's operations and its strategic goals