Russian rating agency RAEX (Expert RA) has assigned to Kazan-based Tatagroprombank a credit rating of B++ (satisfactory level of creditworthiness), with a negative rating outlook.
As the agency said in a press release, factors producing a positive impact on the ratings are the bank's high capital adequacy ratios (as of April 1, 2016 N1.0 stood at 21.4%, while N1.1. and N1.2 equaled 20.7), well-balanced assets and liabilities by maturity in the short-term horizon (as of the balance sheet date N2 equaled 121%, and N3 was equal to 175%), low concentration of drawn funds on clients and the low level of currency risks accepted by the bank (as of the above date the highest open currency position in one currency equaled 0.1% of capital).
The rating is adversely affected by low rates of return (from as of April 1, 2015 through April 1, 2016 ROE equaled 0.6%) and moderately high concentration of active operations on entities associated with the high credit risk. The rating is dampened by the bank's dependence on funds of households and individual entrepreneurs as a source of funding (58.8% of gross liabilities at early April 2016) amid their poor geographical diversification (all the funds were drawn in the Republic of Tatarstan).
"The agency is positive about an increase of the bank's core capital by Rub 220 mln in 2016," RAEX managing director for banking ratings Stanislav Volkov pointed out. "However, we also pointed to sharp growth of asset concentration on parties affiliated with the bank, which increases exposure of the credit portfolio to the risk of cross defaults and determines the negative rating outlook".