The ‘B++' rating indicates that OJSC Eurasian Bank is qualified as a sufficiently reliable borrower. Risk of a delay in meeting liabilities is moderate, restructuring risk for the loan / part of the loan is insignificant.
OJSC Eurasian Bank is a subsidiary bank of the joint-stock company Eurasian Bank (Kazakhstan) and is therefore part of the Eurasian Financial and Industrial Corporation including a bank, insurance and brokerage companies, industrial assets in Kazakhstan, Russia and other countries. JSC Eurasian Bank (Kazakhstan) is one of the ten major banks of Kazakhstan.
The principal arguments for the rating score of OJSC Eurasian Bank is the high capital quality and capital adequacy, the growing performance, the high liquidity, the low credit risks and the profitability of the Bank.
The capital of OJSC Eurasian Bank as of 4/1/2012 was RUB 537,788 thousand, the core capital accounting for 97.6% of it. The share of the Bank’s authorized capital in its equity capital was 44.5%. The Bank’s capital increased by RUB 12,969 thousand in 2011 and further grew by RUB 10,193 thousand in January-March 2012, basically on the Bank’s retained earnings.
Capital adequacy of the Bank is high. Capital adequacy ratio did not sink below 27% in 2011 and early 2012 (as of January 1, 2012 it was 27.41%). As of April 1, 2012, capital adequacy ratio was 33.04%.
Assets and liabilities of the Bank showed high growth rates. In 2011, assets increased 2.1-fold; liabilities 3.3-fold. Net lending receivables accounted for 56.6% of the Bank's assets as of January 1, 2012, funds of non-credit institutions accounted for 58.0% of its liabilities. The Bank’s assets as of January 1, 2012 reached RUB 2,140,479 thousand, liabilities totaled RUB 1,571,269 thousand.
Liquidity results of the Bank are high and do not approach the specified threshold values. Instant and current liquidity ratios as of April 1, 2012 were 158.29% and 324.62% respectively, long-term liquidity ratio was 8.00%.
Amounts of large credit risks of the Bank, loans, guarantees and surety bonds to the Bank’s members as well as the cumulative insider-related risks are not high. The N7 and N10.1 indicators do not exceed Russia’s banking average. The N9.1 indicator is above the average value in Russia’s banking system, yet its value is comfortably below the maximum value specified. As of April 1, 2012, the N7, N9.1 and N10.1 indicators equaled 209.89%, 6.13% and 0.06%, respectively, against the average values of 222.5%, 1.5% and 0.7, respectively, in the banking sector of the Russian Federation.
The Bank’s activity is profitable. Profit after taxes for 2011 was RUB 22,074 thousand, profit for January-March 2012 was RUB 10,308 thousand (Form 102). Net interest income after provisions against possible losses prevails in the Bank’s net income structure (69.5% of net incomes in 2011).
However, return on equity and return on assets achieved by OJSC Eurasian Bank is low and far below the average value in the banking sector of the Russian Federation. In 2011, return on equity was 4.2%; return on assets was 1.2% (against the average values of 17.6% and 2.4%, respectively). Both ROE and ROA of the Bank decreased in 2011 by 0.8 percentage points against 2010.
The rating score is also restricted by the instability of instant and current liquidity ratios and the high concentration of the Bank liabilities within groups of depositors.
Instant (quick) and current liquidity ratios of the Bank lack stability, ranging from the values approaching the banking average to the values exceeding them twice or even three times. These fluctuations occur within short time intervals. For instance, quick liquidity ratio was 77.0% on December 1, 2011; 175.4% on January 1, 2012; 158.3% on April 1, 2012. Current liquidity ratio was 196.1% on January 1, 2012; 172.6% on February 1; 324.6% on April 1. Average quick liquidity ratio in Russia’s banking system in late 2011 and early 2012 was about 60%, current liquidity ratio was about 77-85%.
Concentration of the Bank’s liabilities within groups of investors is high. Ten largest depositors of the credit institution account for about 99% of its combined obligations.
OJSC Eurasian Bank has been active in market of banking services since 1990. It was registered by the Bank of Russia under no. 969. The bank possesses a general banking license as of 4/8/2010 and a license for attraction of deposits and placement of precious metals as of 4/8/2010. The Bank participates in the compulsory deposit insurance system (registered under no. 538 as of January 27, 2005).
The bank is located in Moscow and has no branches or additional outlets. It provides the whole range of services involving rubles and foreign currencies, lends primarily to legal entities, and is active in the security market.
The Bank’s auditor is CJSC KPMG (location: Olimpiysky prospectus, 18/1, office 3035, 129110 Moscow). Postal address: Krasnopresnenskaya nab. 10-C, floor 31, 123317, Moscow. Tax number: 7702019950, tax registration reason code 770201001, code as per Russian National Classifier of Businesses and Organizations: 17260662. KPMG is a member of the self-regulatory organization Audit Chamber of Russia (a non-profit partnership), certificate no. 255 as of 12/21/2009.
This press release is based on the statement of assigning a credit rating to OJSC Eurasian Bank.
The rating score, along with any information and conclusions provided in this press release, only conveys our opinion on the Company'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 and accredited by the Ministry of Finance of the Russian Federation. 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. Krachkovskaya
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.
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