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Press Releases / 11.06.2013
Press Release as of 11.06.2013 Joint-Stock Commercial Bank Bashcomsnabbank CJSC AK&M Rating Agency affirmed the ‘A’ credit rating of JSCB Bashcomsnabbank (license no. 1398) as per the national scale. The outlook is stable. The ‘A’ rating indicates that Joint-Stock Commercial Bank Bashcomsnabbank (JSCB Bashcomsnabbank) 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 impressively growing equity capital, net loans receivable, profit performance, return ratios, and favorable loan portfolio as the positive rating drivers. The Bank’s equity capital grew by 28.9% in 2012, further increased by 11.1% for first four months of 2013 and reached RUB 1,155.63 million as of May 1, 2013. The main equity growth drivers are the Bank’s authorized capital, retained earnings and a subordinated loan. As of May 1, 2013, the authorized capital of JSCB Bashcomsnabbank accounts for 36.4%, retained earnings from prior years for 23.8%, the subordinated loan for 25.0% of its equity capital. Over the period from April 1, 2012 to April 1, 2013, the Bank’s net loans receivable increased by 43.0%. On April 1, 2013, its net loans receivable reached RUB 7,049.61 million (76.3% of the Bank’s assets). The legal entities accounted for the greater part (about 83.5%) of the Bank’s receivables. We also appreciate JSCB Bashcomsnabbank’s ability to maintain high quality of its loan portfolio. As of April 1, 2013, high-grade loans (quality grades 1, 2) accounted for ca. 95%, low-grade loans (quality grades 4, 5) for 4.3% of the total loans receivable. The growing KPIs and their structural properties contribute to the Bank’s high rating. JSCB Bashcomsnabbank benefits from its soaring profits. According to preliminary 2012 results, the Bank’s pre-tax profit increased about 2.5 times year-on-year to RUB 166.4 million. For the first quarter of 2013, the Bank posted a profit of RUB 58.3 million (2.2 times above the result achieved in Q1 2012). The growing profits drove the Bank’s ROE and ROA ratios above the average levels in Russia’s banking sector: according to preliminary estimates, return on equity reached 19.5%, return on assets was 2.3% on April 1, 2013, against 17.0% and 2.1% on average in the banking system, respectively, as of the same date. At the same time, the low capital adequacy, high credit risks and a reduction in legal entities’ account balances are apparently working against the Bank’s rating. The Bank’s capital adequacy ratio is low, floating just over 11% in 2012 and early 2013. The peak value (11.99%) was registered on April 1, 2013, the lowest value (11.20%) on July 1, 2012 and August 1, 2012. It will be noted that the capital adequacy ratio never moved below 11%. The credit risk ratios (N7, N9.1, N10.1) are uncomfortably high. For instance, the N7 ratio (maximum amount of major credit risks) stayed above 400% for most of the year, decreased in November 2012 and reached 365.11% on April 1, 2013 (against 203.1% on average in Russia’s banking sector as of the same date). The N9.1 ratio, namely, the maximum amount of loans, guarantees and sureties to the bank’s members, is also far above the average percentage in the banking sector (9.5% and 1.3%, respectively, as of 4/1/2013). The N10.1 ratio (total magnitude of insider-specific risk) is also much above the average level (2.52% as of January 1, 2013 against 0.7% in the banking sector on the same date). Another risk factor for JSCB Bashcomsnabbank is the negative trend in the legal entities’ account balances. The Bank has been facing a reduction in the legal entities’ deposits since the second half of 2012. The legal entities’ combined deposits decreased from RUB 3,854.82 million on July 1, 2012, to RUB 3,501.49 million on October 1, 2012 and further dropped to RUB 3,246.17 million as of April 1, 2013. As a result, despite a rebound in the second quarter of 2012, the legal entities’ deposits decreased by approximately 15.8% on April 1, 2013 against the peak value in mid-2012. However, the growing deposits of physical persons offset this reduction. Full name: Joint-Stock Commercial Bank Bashcomsnabbank Short name: JSCB Bashcomsnabbank The Bank operating in the market of banking services since 1991 was registered by the Bank of Russia under no. 1398 as of March 1, 1991. The bank possesses a license for banking operations involving Russian rubles and foreign currencies (without accepting money deposits from individuals) as of August 6, 2012, and a license for accepting money deposits from individuals denominated in Russian rubles and foreign currencies, as of June 25, 2012. The Bank participates in the compulsory deposit insurance scheme (registered under no. 474 as of January 20, 2005. Headquartered in Ufa, the Bank has a branch in Moscow, satellite offices in Ufa and other cities of the Republic of Bashkortostan. JSCB Bashcomsnabbank provides the whole range of banking products and services involving Russian rubles and foreign currencies, lends to legal entities and individuals, and performs operations in the securities market.2
This press release is based on the statement of assigning a credit rating to JSCB Bashcomsnabbank. 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.
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