Press Releases / 17.07.2013

Press Release as of 17.07.2013


CJSC AK&M Rating Agency affirmed the ‘A+’ credit rating assigned to OJSC BALTINVESTBANK (lic. no. 3176) as per the national scale. The outlook is stable.


The ‘A+’ rating indicates that OJSC BALTINVESTBANK qualifies as a highly reliable borrower. Risk of a delay in meeting liabilities is insignificant.

We appreciate the Bank’s favorable net income structure, relatively low funding costs, high operating profitability and return ratios, sound and well-balanced loan portfolio, strong liquidity position, and well-developed branch network as positive rating drivers.

The net interest margin is dominating the Bank’s net incomes, indicating a well-balanced structure of earnings. The net interest margin accounted for 85.5% of the total net income in 2012; in Q1 2013, this percentage increased to 87.7%, indicating the Bank’s high commitment to lending as far as its business profile is concerned.

The cost of borrowing is lower than the Bank of Russia’s refinancing rate, which supports the Bank’s rating. In 2012-2013, customer deposits and total liabilities cost the Bank no more than 7% per annum.

The Bank is a sound and profit-making institution. Its net profit for the first quarter of 2013 was RUB 22.2 million, return on assets as of April 1, 2013 was 0.64%, return on equity was 6.22%.

Another argument for the Bank’s rating is the sustained quality of its loan portfolio dominated by high-grade loans (quality grades 1-2). As of June 1, 2013, the share of non-performing and problem loans in the loan portfolio was 6.3%, roughly matching the average percentage in Russia’s banking sector (6.6%).

The strong liquidity position of the Bank also contributes to its rating. As of July 1, 2013, N2 was 52.9%, N3 was 74.3%, N4 was 83.1%. Therefore, OJSC BALTINVESTBANK maintains a sufficient liquidity cushion. The Bank has not failed to meet the liquidity requirements since our previous review.

OJSC BALTINVESTBANK has a well-developed PoS network. Apart from the HQ, this network comprises 6 branches, 29 satellite offices, 13 operational offices, and 8 stand-alone cash desks. The Bank’s presence in other regions enables it to geographically diversify its loan portfolio and funding sources.

At the same time, the weaker profit performance, fairly poor capital adequacy and quality, and high magnitude of insider-specific risk are sending negative signals for the Bank.

The shrinking earnings are exerting certain pressure on the rating of OJSC BALTINVESTBANK. After an upsurge in 2011, the Bank’s profit decreased in 2012 as its operating expenses grew faster than its net income. The first quarter of 2013 did not bring a change to the trend: pre-tax profit dropped by RUB 73.9 million (-44.1%), profit after tax by RUB 118.5 million (-84.2%).

Since our previous review, the poor equity capital quality and adequacy have remained one of the negative rating drivers for the Bank. As of July 1, 2013, the latest reporting date, the capital quality ratio (Tier 2 to Tier 1 capital ratio) reached 57.1%, unable to meet the Central Bank of Russia’s guidelines (no more than 30%). The share of authorized capital is still low (4.1%). The capital adequacy ratio (N1) is fluctuating within the 11-12% range.

The total magnitude of insider-specific risk (N10.1) has been above the average level in Russia’s banking sector in 2012-2013. As of July 1, 2013, the Bank’s N10.1 ratio was 2.63%.

Full name: Open Joint Stock Company Baltic Investment Bank.


OJSC BALTINVESTBANK has been operating in the market of banking services since 1994. The Bank is licensed by the Central Bank of the Russian Federation, general banking license no. 3176 as of March 5, 2012.

The Bank participates in the compulsory deposit insurance scheme, DIS registration certificate no. 824 as of March 21, 2005.

OJSC BALTINVESTBANK provides the standard range of banking products and services involving Russian rubles and foreign currencies. The Bank prioritizes servicing large and mid-sized enterprises in various spheres of business in the Northwest federal district and other regions of Russia, as well as lending to SME businesses.

The Bank is headquartered at: ul. Divenskaya 1A, St. Petersburg. Apart from the HQ, OJSC BALTINVESTBANK has a branch network consisting of 6 branches, 29 satellite offices, 13 operational offices, and 8 stand-alone cash desks. The bank is currently operating in 18 regions in 5 federal districts of the Russian Federation.

The Bank’s RAS reports are audited by Research, Consulting, Audit, Developments LLC (a member of nonprofit partnership Russian College of Auditors, primary registration number 10305004296). The Bank’s IFRS reports are audited by CJSC KPMG (a member of nonprofit partnership Audit Chamber of Russia, primary registration number 10301000804).

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This press release is based on the statement of assigning a credit rating to OJSC BALTINVESTBANK.

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

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.

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

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), 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 Analysis, Consulting and Marketing 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.