Fitch Ratings has upgraded Credit Bank of Moscow’s rating to ‘BB’ on the back of a better risk profile evaluation
On 3 June 2019, Fitch has upgraded Credit Bank of Moscow’s (CBM) credit rating to ‘BB’ with a 'stable' outlook.
The upgrade reflects an improved assets quality achieved over the last 2 years due to effective workouts, sales and provisioning, while preserving decent capital adequacy levels. In Fitch's view, the remaining volume of net risky assets is now more manageable, as potential risks are expected to be adequately covered by sound pre-impairment profit without impacting capital.
The Bank’s risky assets, of which the assessment by Fitch largely overlaps with the impaired loans reported by the Bank (Stage 3 and POCI), decreased to RUB76 billion at end-1Q19 from RUB149 billion at end-3Q17.
«The two rating upgrades we have obtained this year (Expert RA upgraded the Bank's rating to 'ruA' on 26 April 2019) confirm that we have chosen the right development strategy, our efforts to improve the loan portfolio quality proved successful, and the Bank's shareholders and top management have a valid vision of its development. The last several years have reshaped the banking market profoundly, introducing banks to new macroeconomic and geopolitical realities. During that time, the Bank managed to become one of the key players in the sector (being listed as a systemically important bank in 2017) and grew more reliable, adapting effectively to the changing macroenvironment, which is attested to, in particular, by the rating upgrade. We highly appreciate Fitch's favorable rating action because it has studied the Bank in detail for more than 15 years (the first rating was assigned in 2004), knows well its business model and development milestones,» commented Vladimir Chubar, Chairman of the Management Board.
In evaluating other rating components, Fitch analysts noted that:
- Strong pre-impairment profit enables the Bank to cover adequately its risky assets. Assuming an extra 50% stress on the risky assets, it would therefore require less than 1 year to reserve them sufficiently.
- The Bank enjoys a strong return on equity, as a significant volume of repos on its balance sheet generates a stable margin without affecting the capital.
- The Bank has ample possibilities to raise additional liquidity.
For further information please contact Investor Relations at +7 (495) 797-42-22 ext. 6223 (e-mail: IR@mkb. ru)