Russian rating agency RAEX (Expert RA) has lowered its credit rating on Kazan-based Intekhbank to B++ (satisfactory level of creditworthiness). The stable outlook was set for the rating. Earlier the bank was rated at A (high level of creditworthiness, Sublevel 3), with a negative outlook.
Among key factors producing a positive impact on the rating the agency names low NPL on the bank's balance sheet (1.1% of the aggregate credit portfolio as of March 1, 2016) and acceptable coverage of the credit portfolio (174% as of the balance sheet date taking into account collateral of securities, sureties and guarantees). Also, analysts pointed to good coverage of operating expenses by net interest income and commission income (190% for the fourth quarter of 2015).
The rating action, as RAEX specified in a press release, was primarily driven by the bank's unprofitable activity in 2015 primarily due to the additional formation of loan loss provisions (ROE, after tax) equaled -15% in 2015). As a result, the bank's capital adequacy ratios fell drastically. Specifically, N1.1 fell to 5.8% as of March 1, 2016 against the average of 8.2% for January-September 2015. Also, the rating is also adversely affected by a contraction in the portion of liquid assets to 8.8% as of the balance sheet date against the prior-year average of 11.1%. The rating is still under pressure from the high portion of extended loans and low turnaround of the portfolio of loans issued to businesses and individual entrepreneurs (around 8%, on average, in the past 12 months).
