CJSC AK&M Rating Agency confirmed the ‘A' credit rating (stable outlook) assigned to OSJC Coalmetbank as per the national scale.
The ‘A' rating qualifies OJSC Coalmetbank as a highly reliable borrower.
One of the arguments supporting the rating score is that OJSC Coalmetbank receives considerable support from its owners. The largest shareholder of the Bank is NPF MECHEL-FOND. Therefore, one of the Bank's proprietors has considerable financial capacities to provide the necessary assistance to the bank should the macroeconomic environment change for the worse.
The customer pool of OJSC Coalmetbank features high loyalty. Many bank customers are associated to or invest in Mechel group, the share of customers employed by Mechel enterprises is considerable. The stable and loyal customer pool essentially reduces the Bank's funding risks. The inflow of funds from both legal entities and physical persons in 2010-2011 is also supportive.
OJSC Coalmetbank's key performance indicators are growing steadily. In 2010, the Bank's assets increased by 27.3% against the average growth rate in Russia's banking sector of 14.9%. As of October 1, 2011, the Bank's assets grew by 25.7% year-to-date.
There is also an increasing trend in the amount of the loan portfolio. As of the end of nine months 2011, amount of the loan portfolio rose by 117.2% year-to-date to RUB 6,805.1 million.
OJSC Coalmetbank liabilities are growing: in 2010, they increased by 27.6% year-on-year; as of October 1, 2011, they increased by 27.4% year-to-date.
Another argument for the rating score is the high liquidity of OJSC Coalmetbank. The bank's quick liquidity ratio as of December 1, 2011 was 60.88%, the minimum value required being 15%. Current liquidity ratio equaled 102.79% against the minimum acceptable percentage of 50%. As a whole, the principal liquidity indicators (N2, N3) exceeded the average level in the banking system of the Russian Federation in 2011.
OJSC Coalmetbank has achieved good diversification of funding sources. As of October 1, 2011, the funds of non-credit institutions accounted for the greater part of the Bank's liabilities (70.4%).
We found that the assets and liabilities are well-balanced in terms of their currency. On-call and overnight assets together account for over 65% of the current assets, which produces a positive effect.
One of the issues restrictive on the rating score is the unstable profit performance and the low margin result. In 2008, pre-tax profit had decreased until it reached a negative value of RUB 10.4 million in 2009. In 2010, pre-tax profit showed a record growth over the period under review (2007-2011) reaching RUB 174.3 million. The Bank's net profit also reached a record high of RUB 104.9 million in 2010.
In 2011, the Bank posted a loss of RUB 31.7 million due to the negative revaluation of securities. In January 2012, however, the Bank secured a net profit of RUB 23 million.
Return on equity and return on assets of the Bank were below the respective average levels across the banking system in 2010-2011.
The quality of OJSC Coalmetbank's loan assets is low. Class 1 loans and class 2 loans together account for 66.0% of the loan portfolio, which is below the average level in Russia's banking system (81.5%). The share of doubtful loans is 26.8% (the average percentage in Russia's banking system being 11%). At the same time, most of the loans classified as doubtful are well-serviced, with acceptable repayment prospects. The share of NPLs and problem loans in the loan portfolio structure as of October 1, 2011 is 7.2%, below the average percentage in the banking system of the Russian Federation (about 7.5%).
The high credit risk concentration also exerts pressure on the rating score. The maximum amount of large credit risks (N7) is above the average. As of December 1, 2011, the N7 indicator was 506.2% (the average percentage in Russia's banking sector as of the same date being 227.8%).
OJSC Coalmetbank has been active in the market of banking services since 1994. The Central Bank of the Russian Federation granted it license no. 2997 as of December 26, 2005. OJSC Coalmetbank participates in the Deposit Insurance System. Among the Russian regional banks, OJSC Coalmetbank is a mid-sized bank in the amount and volume of operations. As of December 1, 2011, the Bank's net assets totaled RUB 11,020.8 million, equity capital was RUB 804.9 million As of December 1, 2011, the Bank ranks 219th in the volume of net assets in Russia. The Bank's auditor is Altai-Audit-Consulting LLC.
OJSC Coalmetbank provides all principal kinds of banking products and services involving Russian rubles and foreign currencies, and is engaged in operations in the security market. Other priorities of the Bank are operations in the stock market, lending to enterprises of the real economy, primarily in the coal and metallurgical sectors, and consumer lending within payroll card programs.
This press release is based on the statement of assigning a credit quality rating to OJSC Coalmetbank.
The rating score, 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.
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 – Provision 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide business banking services to project and engineering entities implementing investment projects), the MICEX (as a prerequisite for including bonds in the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation base, for listing bonds and for providing access to the MICEX+ trading mode). Pursuant to an order of Russia's Government AK&M Ratings count for approving the capitalization increase procedure for 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
Press release by: A.M. Petrukhin
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18