Russian rating agency RAEX (Expert RA) has lowered its creditworthiness rating on Mast-Bank from B (the satisfactory level of creditworthiness) to C+ (the very low level of creditworthiness (pre-default)). The negative rating outlook means the strong likelihood of the rating downgrade over the medium term.
"The rating was downgraded as there is a strong likelihood of full loss of liquidity in the short term amid a continuing heavy outflow of deposit accounts," the rating agency said in a press release.
In addition, RAEX affirmed Vladbusinessbank's creditworthiness rating at A (the high level of creditworthiness). The sublevel of the rating is 2, the outlook is stable.
Analysts pointed out that Vladbusinessbank's rating was positively affected by high indicators of business profitability and high numbers of instant and current liquidity (N2 equaled 92.2%, and N3 was equal to 95.7% as of April 1). The rating is backed by the low portion of 3-4 quality category loans (3.2% as of April 1), lower overdue debt in the aggregate credit portfolio (NPLs equaled 1.7% as of April 1), and also the credit portfolio's high coverage ratio.
Meanwhile, the rating was adversely affected by the low absolute number of equity. "In the second quarter of 2015 the bank plans to complete repurchase of its additional share issue worth Rub 120 mln that will provide the bank with an additional cushion in relation to the minimum capital requirements," RAEX director for banking ratings Stanislav Volkov commented.
Moreover, the agency noted in its press release that Vladbusinessbank's rating was depressed by the bank's high reliance on retail funds as a primary source of funding amid their low geographical diversification, insufficiently balanced assets and liabilities in terms of duration over the long term, the lack of insurance protection of collaterals and its own property.