Russian rating agency RAEX (Expert RA) has affirmed its creditworthiness rating on Nefteprombank at B++ (satisfactory level of creditworthiness) and withdrew it as the bank refused to keep its rating up to date. Before withdrawing the rating it carried a stable outlook, the agency said in a press release.
Among key positive factors RAEX highlights low overdue debt that it maintains on its balance sheet (less than 1% of the total credit portfolio as of November 1, 2016), well-balanced assets and liabilities in the short and long term (as of November 1, 2016 N2 stood at 101%, N3 was equal to 230.2%, the ratio between high-liquidity assets and drawn funds equaled 24.1%, and N4 was 22.4%.
The rating is supported by acceptable coverage of loans payable (as of November 1, 2016 the coverage ratio of the portfolio of loans issued to businesses, individual entrepreneurs and households, excluding collateral of securities, sureties and guarantees, equaled 120.4%), good diversification of funds drawn from customers, and also the possibility to raise extra funds against collateral of securities from the Lombard List.
The rating was adversely affected by a contraction in the capital adequacy ratios in 2016 (as of November 1, 2016 N1.0 stood at 12.6% vs. 15.2% as of January 1, 2016, N1.2 was equal to 9.5% against 11.2% as of January 1) along with a decrease in rates of return (from October 1, 2015 through October 1, 2016 ROE equaled -6.6% vs. 12.9% from October 1, 2014 to October 1, 2015).
The rating is still pressured by the moderately high proportion of loans from the third to fifth quality categories in the total credit portfolio (23% as of November 1, 2016) and high concentration of high credit risks (the ratio between KSKR and net assets was over 77% as of November 1, 2016).