Russian rating agency RAEX (Expert RA) has lowered its creditworthiness rating on Moscow-based Bank Strategia to B+ (Quite low level of creditworthiness), with a negative rating outlook, RAEX reported, noting the bank was previously rated at B++ (satisfactory level of creditworthiness), with a stable outlook.

Main factors producing a positive impact on the rating are the resource base diversified by customers (as of April 1, 2016 the proportion of funds of ten biggest creditors / creditor groups in gross liabilities equaled 8.5%) and good short- and mid-term liquidity ratios (as of April 1, 2016 N2 equaled 131%, and N3 came to 130%).

One of the primary reasons for the rating downgrade was unprofitable activities of the bank (ROE, excluding gratuitous aid provided from April 1, 2015 through April 1, 2016, equaled -28.9%) due to the substantial additional accrual of loan loss provisions in the first quarter of 2016. An increase in the cost of funds drawn from households (from 11.5% in 4Q 2015 to 12.4% in 1Q 2016 on an annualized basis) and a contraction in the coverage of operating expenses by net interest and commission income (from 73.8% in 4Q 2015 to 29.9% in 1Q 2016) reflect higher pressure on the bank's capital. As the agency thinks, the management of the bank's capital adequacy ratio may require a contraction in risk-weighted assets or cash injections into capital, sources of which are still not determined, which leads to the negative outlook. The rating is still adversely affected by low property collateral of the credit portfolio (collateral excluding the pledge of securities, sureties and guarantees under the credit portfolio, taking no account of inter-bank loans, equaled 52.5% as of April 1, 2016) and the bank's high dependence on the money of households, individual entrepreneurs as a primary source of funding (as of early April the proportion of household funds in gross liabilities equaled 68%).