The credit ratings service at international rating agency Standard & Poors has downgraded its long-term credit rating on Krasnodar-based Kraiinvestbank from B+ to B and affirmed the lenders short-term credit rating of B. The ratings carry a stable outlook.
The lenders national scale rating was lowered from ruA to ruA-.
The agency thinks that deteriorated financial indicators and liquidity of the Krasnodar regions government (controls 98.04% of the bank) limits its possibilities to provide emergency support to its subsidiary. The regions worsening ability to provide support is confirmed by the fact that the regional administration put off a planned capital injection from last year to this one and cut the capital uplift from Rub 2 bln to Rub 500 mln, the agencys analysts specify.
S&P still assesses Kraiinvestbanks creditworthiness at b. The banks quantitative profit indicators remain weak, but, as a whole, have been very stable in the past few years, including during the period of an economic slowdown, the agency specifies. The financial profile of Kraiinvestbank, as that of other Russian banks, will come under pressure in 2014—2015 from the need to pile up extra loan loss provisions which, as the agencys baseline forecast shows, will account for around 2%.
The stable outlook reflects analysts expectations that Kraiinvestbanks capitalization and asset quality will remain resistant to mounting economic and sectoral risks of the Russian Federation in the next 12 to 18 months. In particular, Kraiinvestbanks firm position in the area of service, which puts it apart from comparable banks, will become its advantage in terms of deposit stability and the ability to generate income from core activities, S&P professionals believe.