Russian rating agency RAEX (Expert RA) has affirmed creditworthiness ratings of A (the high level of creditworthiness) of two lending institutions, namely Tambovcreditprombank (Sublevel 2) and Energomashbank (Sublevel 3). The outlook for the rating is stable, which means the strong likelihood of the bank's rating remaining unchanged in the medium term.

Tambovcreditprombank's rating is supported by the well-balanced breakdown of its assets and liabilities of up to 30 days, its moderately high ROE, and also the credit portfolio's high coverage ratio. The agency positively assesses the bank's client-diversified resource base, the low level of acceptable currency risks and its strong competitive positions in the key region of operation.

The agency adversely assesses the bank's moderately high concentration of active operations on businesses associated with the high credit risk (as of April 1, 2015 large credit risks for the assets excluding provisions equaled 47.6%) and the bank's dependence on household funds as a primary source of funding amid high geographical concentration in one region (the Tambov region). "Furthermore, we point to the bank's low collateral and equity protection insurance (under 10% as of April 1), RAEX director for banking ratings Stanislav Volkov commented.

Energomashbank's rating is positive affected by well-balanced assets and liabilities over the short term, high collateral of loans and low concentration of borrowed funds on large creditors. Among positive factors the agency points to the bank's acceptable capital adequacy ratio (N1.0 equaled 15.2% as of April 1).

Among key negative factors the agency names the moderate quality of the credit portfolio (as of April 1, 2015 the portion of 4th and 5th category loans equaled 15.1%, NPLs accounted for 8.9% of the aggregate credit portfolio) and high operating expenses (7.7% of average assets for the period from April 1, 2014 through April 1, 2015). "Moreover, the high portion of demand liabilities makes the bank to maintain a big cushion of highly liquid assets. Due to substantial outflows of short-term borrowed funds from April 1, 2014 through April 1, 2015 the bank's assets declined 12%, which puts pressure on the bank's profitability and is adversely assessed by the agency," Volkov noted.