Russian rating agency RAEX (Expert RA) has confirmed its credit rating of A (high level of creditworthiness) on North Credit Bank, and reduced the rating sublevel from 2 to 3, with a stable outlook, RAEX's press service reported.
The bank's rating is positively influenced by well-balanced assets and liabilities by duration in the short-term horizon (as of December 1, 2015 N2 equaled 112%, and N3 was equal to 106%, the portion of LAM in gross assets equaled 21.4%) and solid coverage of the credit portfolio (as of December 1, 2015 the credit portfolio coverage (excluding inter-bank loans), given the collateral of securities, sureties and guarantees amounted to 264%, and 131% excluding these components).
The rating sublevel was reduced due to deteriorating quality of the bank's credit portfolio as from January 1 through December 1, 2015 the proportion of loans of the third to fifth quality categories increased from 24.8% to 36%.
The agency's analysts think that the rating was pressured by the bank's losses (from October 1, 2014 through October 1, 2015 the lender's ROA equaled -2%, and ROE came to -14.3% under after-tax profit excluding income from property received for free) and heavy reliance of the bank's resource base on household funds as a funding source amid narrow geographical diversification (as of December 1, 2015 household funds accounted for 61.2% of gross liabilities, with over 80% of household funds drawn in the Vologda region).