Press Releases / 04.12.2013

Press Release as of 04.12.2013

Commercial Bank «BFG-Credit»

CJSC AK&M Rating Agency affirmed the national scale credit rating assigned to Commercial Bank BFG-Credit (lic. no. 3068) at 'A', with a stable outlook.


The 'A' rating indicates that Commercial Bank BFG-Credit qualifies as a highly reliable borrower. Risk of a delay in meeting liabilities is relatively low, restructuring risk for a loan / part of a loan is minimal.

We appreciate the Bank's continuing positive development, profitable operations, and low funding costs as key positive rating drivers.

As of November 1, 2013, equity capital of Commercial Bank BFG-Credit amounted to RUB 3,367.3 million growing by RUB 278.2 million (9.0%) since the start of this year. In 2012, the Bank increased its equity capital by RUB 770.0 million (33.2%). The equity capital increase was mainly driven by the growing retained earnings and a subordinated loan.

As of October 1, 2013, the Bank's assets and liabilities were appreciably higher than they had been at the start of this year. For 9 months, assets grew by 41.1% (mainly on account of net loans receivable), 4 times more than the average growth rate in Russia's banking sector. The Bank's liabilities increased by 43.7% due to an inflow of customer deposits and more debt instruments issued.

It should also be noted that the Bank's private deposit growth rate exceeds the average percentage in Russia's banking sector (32.4% in 2012, 45.8% for 9 months 2013, against 20.0% and 11.9% on average, respectively).

Commercial Bank BFG-Credit's impressively growing net income and profit performance is a strong argument for the Bank's rating. In particular, the Bank increased its net income by RUB 223.1 million (34.5%) in 2012, by RUB 339.2 million (62.3%) for 9 months 2013. Net interest margin after provisions for possible losses is still the main contributor to the Bank's total net income.

The high profit performance also contributes to the Bank's rating. In 2012, pre-tax profit increased by 16.5% year-on-year reaching RUB 249.4 million. In 2013, the Bank's 9-month pre-tax profit increased by RUB 181.6 million (2.2 times) year-on-year to RUB 329.2 million.

The relatively low cost of debt (compared with the Bank of Russia's refinancing rate) is another positive signal for the rating. In 2012-2013, the cost of liabilities and interest rates on customer deposits did not exceed 5% p.a.

At the same time, the greater shares of problem and non-performing loans exceeding average values in Russia's banking sector, fairly high concentration of liabilities in one group of investors, unimpressive acid test and current liquidity ratios, and high N7 ratios are exerting pressure on the Bank's credit rating.

The shares of problem and non-performing loans in the Bank's loan portfolio are exceeding the average levels in Russia's banking sector, which we regard as a negative rating driver. As of November 1, 2013, they accounted for 16% of the Bank's loan book. In absolute terms, quality grade 4 (problem) loans increased by RUB 1,410.0 million (2.5 times), quality grade 5 (non-performing) loans by RUB 582.7 million (36.4% since the start of this year).

The concentration of liabilities in one group of investors stays fairly high. The maximum share of liabilities attributable to one group of investors as of November 1, 2013 was 11.01% of the total liabilities (RUB 2,991.8 million), while the ten largest investors (groups of investors) accounted for 49.37% of the total liabilities. Therefore, today's concentration of the Bank's liabilities indicates its significant dependence on major customers.

We regard the acid test and current liquidity ratios as low. Since our previous review, the N2 and N3 ratios have been below the average levels in Russia's banking sector, the N3 ratio even getting close to the lower limit of 50% set by the Central Bank of Russia. It should however be noted that the Bank has never failed to meet the Central Bank of Russia's requirements regarding these ratios.

Just as earlier, the Bank's N7 ratio (maximum amount of large credit risks) is far above the average value in Russia's banking sector, although staying below the regulatory limit of 800% set by the Central Bank of Russia. As of the last reporting date (November 1, 2013), this ratio was 625.14%.

Full name: Commercial Bank BFG-Credit (Limited Liability Company).

Short name: Commercial Bank BFG-Credit.

Commercial Bank BFG-Credit has been active in the market of banking services since 1994. The Bank possesses general banking license no. 3068 issued by the Central Bank of the Russian Federation on February 19, 2013, with a banking license to accept deposits of precious metals and effect other transactions involving precious metals, dated April 22, 1999

The Bank participates in the compulsory deposit insurance scheme, DIS registration no. 730 as of March 3, 2005.

Commercial Bank BFG-Credit provides the standard range of banking products and services involving Russian rubles and foreign currencies.

Headquartered at Kutuzovsky Prospekt 35/30 in Moscow, Commercial Bank BFG-Credit operates a network consisting of 4 branches, 25 satellite offices, 5 operational offices, 1 stand-alone cash desk, and 2 representative offices.

The auditor of the Bank's RAS financial statements is Alt-Audit LLC, certificate of membership in nonprofit partnership SRO Audit Chamber of Russia no. 463 as of 12/28/2009, principal registration number 10401001986). The Bank's IFRS financial reports are audited by ZAO Deloitte & Touche CIS.

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This press release is based on the statement of assigning a credit rating to Commercial Bank BFG-Credit.

The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Bank's reliability and shall not be considered as advice on the purchase and sale of securities or the provision of loan facilities to the Bank.

CJSC AK&M Rating Agency will not incur any responsibility for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.

CJSC AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993.

CJSC AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010).

AK&M Ratings are recognized by the Central Bank of Russia (for providing unsecured lending facilities – Regulation 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide cash and settlement services to project and engineering companies implementing investment projects), and the MICEX (for the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation and bond listing purposes). By a resolution of Russia's Government AK&M Ratings count for the recapitalization of banks. Besides, AK&M Rating Agency is recognized by AHML and accredited by SRO National Securities Market Association.


CJSC AK&M Rating Agency
ul. Gubkina 3
Moscow, Russia
Press release by: Y.B. Kuznetsova
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.