Russian rating agency RAEX (Expert RA) has lowered its credit rating on Maikop-based Gaztransbank to B++ (satisfactory level of creditworthiness). The stable outlook was set for the rating. The bank was previously rated at A (high level of creditworthiness, Sublevel 3), with a stable outlook.
The rating action was primarily driven by the bank's aggressive policy of drawing retail deposits, the agency noted, adding that from August 1, 2015 through January 1, 2016 funds of households and individual entrepreneurs jumped 34%, and climbed 30% from year-start 2016 till August 1. The money was drawn at high interest rates compared to those in the market, with the cost of household funds equaling 11.9% in April-June 2016, as Form 0409102 shows, while the maximum interest rate on 12M+ retail deposits reached 12.1% in July 2016.
Also, the agency's analysts pointed to rising concentration of assets on companies associated with big credit risks (the ratio between big credit risks and net assets rose from 65.1% as of year-start 2016 to 73.6% as of August 1, 2016), including on the parties affiliated with the bank. The rating is still adversely affected by heavy lending of construction companies (25% of assets as of early August) and the bank's dependence on household funds as a primary source of funding amid low geographical diversification (as of August 1, 2016 household funds accounted for 65% of gross liabilities).
The rating is positively influenced by the bank's high capital adequacy ratios (as of August 1, 2016 N1.0 stood at 25.8%, and N1.2 was equal to 20.3%) and high coverage of the credit portfolio (as of the balance sheet date the credit portfolio coverage ratio, including sureties and guarantees, equaled 160%, and 107.6% excluding these components). The rating is also backed by high rates of return (from July 1, 2015 through July 1, 2016 ROE on net profit under RAS came in at 19.5%). Furthermore, the agency points to high liquidity indicators of the lending institution (as of August 1, 2016 N2 was equal to 148.4%, N3 equaled 145.4%, and the proportion of high-liquidity assets in gross assets reached 14.6%).