International rating agency Fitch Ratings has affirmed its ratings on four Russian regional banks. In particular, long-term IDR ratings assigned to Chelyabinsk-based Chelindbank and Kazan-headquartered Avers were affirmed at BB-, and those of Promsotsbank (Vladivostok) and Levoberezhny (Novosibirsk) at B+. The outlook for the long-term IDRs is stable.
As the agency noted, IDR and national scale ratings of the four banks are stipulated by their independent creditworthiness as reflected in stability ratings. Stability ratings take into account limited client bases of the banks (although their positions in the relevant regional markets are strong), high levels of concentration and relatively high-risk operating environment in Russia.
At the same time, the ratings take into consideration, overall good financial showings of the banks that are underscored by sufficient capitalization, acceptable asset quality and profitability, and also the comfortable level of liquidity. Much higher ratings assigned to Chelindbank and Avers reflect their much higher capitalization, the wider regional client base at Chelindbank and much lower loan impairment (at Avers), and also benefits from cooperation with TAIF Group (that Avers enjoys).
The stable outlook assigned to the banks' ratings reflects Fitch's expectations that they will be able to preserve their short- and mid-term indicators despite the weak performance of the Russian economy. This opinion is based on the banks' acceptable profitability in recent months after a recession in the Russian economy began, the overall stable quality of their assets and moderate risk appetite. Substantial profit earned before loan loss provisions (solidified by the recent restoration of net interest margin), and also a capital cushion allow them to cover moderate unpredictable loan losses. Liquidity risks are limited given stability of deposit accounts, the liquidity surplus and modest refinancing needs.
Creditworthiness of Primsotsbank and Levoberezhny is closely interconnected as they have a common owner and pursue similar business models, although inter-bank loans and risk division between these banks is limited, Fitch noted.
The full list of rating actions and detailed analysis of every bank is given in the agency's press release.
