The ‘A’ rating indicates that the Bank is highly reliable. Risk of a delay in meeting liabilities is relatively low, restructuring risk for a loan / part of a loan is minimal.
One of the arguments for the rating score is the low magnitude of risk for the loan portfolio. Loan assets of the Bank are of high quality. The share of NPLs and problem loans is insignificant (1.6% and 0.4%, respectively), more than twice below the average level in Russia’s banking system. This proves the well-balanced loan policy and the low credit risk. It will also be noted that class 1 loans and class 2 loans together account for about 95% of the loan indebtedness indicating the high quality of the loan portfolio.
Arrears on the loans granted by the Bank and other funds placed by it as of January 1, 2012 accounted for 4% of the loan receivables, which is 1.6 percentage points below what it had been as of January 1, 2011. 88% of the loan arrears have the term of over 90 days.
Another thing supporting the rating score is the good diversification of funding sources is. As of January 1, 2012, funds of customers accounted for the greater part of its liabilities (47.1%), with good branch diversification of the legal entities using the Bank’s services. It will be noted that the share of this liabilities component increased in 2011, since the share of physical persons’ private contributions decreased (46.9%) as the customers’ funds showed an outstripping growth rate. Concentration of liabilities within one group of investors is average.
Another positive signal for the rating score is the increase in the authorized capital of the Bank by RUB 65 million against 2010 to RUB 320.95 million. The structure of the Bank’s authorized capital is transparent (information on the final beneficiaries is disclosed on the Bank website), indicating the information transparency of the credit institution. The shareholders of the Bank are physical persons, some of them being members of the Bank’s Board of Directors.
Another support for the rating score is the growing equity capital. As of January 1, 2012, the Bank’s equity capital was RUB 806.8 million (against RUB 706.6 million in 2010). As of April 1, 2012, this indicator increased and reached RUB 857 million.
Among the things exerting pressure on the rating score is the low profitability compared with the average values in Russia’s banking system. Analyzing the Bank’s profitability performance we inferred that the financial activity efficiency of the Bank was average. In 2011, ROE was 10.5% exceeding the 2010 result more than twice. Although this ROE is average, it is still below the average profitability level in Russia’s banking system (17.6%). ROA has been fairly low in recent years, below the average level in Russia’s banking system (the difference was 0.79 percentage points in 2010, 1.3 percentage points in 2011). As of January 1, 2012 this difference was 1.1%.
Another negative force is the low capital adequacy (N1). The Bank's CAR ratio has been about 11% (N1) in recent years steadily decreasing by 0.2 percentage points from 12% as of July 1, 2010 to 11.4% as of January 1, 2012. However, it mounted a comeback to 11.9% as of March 1 2012. The low capital adequacy ratio naturally restricts the rating score, since N1 is near the critical level (10%).
Another force restrictive upon the rating score is the poor capital quality. The share of Tier 1 capital was 56% in January 2012 indicating the poor quality of the Bank’s capital. 36% of the secondary capital results from property revaluation surplus, which also indicates the poor quality of the Bank's capital.
The bank has been active in the market of banking services since 1991 and is a mid-sized bank in the amount and volume of operations. The bank is registered in Ufa and has a branch in Moscow, 1 representative office in Kazan and 2 offices in Nizhny Novgorod and Chelyabinsk. The Bank’s PoS system consists of 23 additional outlets and 2 stand-alone cash desks. In March 2012, the Bank ranked 267th in terms of assets in Russia (268th in March 2011). As of January 1, 2012, the Bank's assets totaled RUB 7.8 billion. Equity capital equaled RUB 827 million in 2011.
The bank possesses banking license no. 1389 granted by the Central Bank of the Russian Federation on January 20, 2003. Also, the Bank has licenses for other activities granted by the Federal Financial Markets Service of Russia: dealing license no. 002-11958-010000 as of January 27, 2009 (without limitation of the period of validity) and license no. 002-11955-100000 as of January 27, 2009 for brokerage operations (without limitation of the period of validity). In January 2005, the Bank was included in the register of the banks participating in the Deposit Insurance Scheme (DIS), certificate of registration for the participation in the DIS scheme no. 474 as of 1/20/2005). The Bank’s auditor is Listik and Partners LLC located at: ul. Pushkina 6-V, Chelyabinsk, 454091 Russia (license for auditing activities no. E 001508 granted by the Ministry of Finance of the Russian Federation on 9/6/2002). The Bank focuses on lending, cash and settlement services and deposit services to legal entities and physical persons.
This press release is based on the statement of assigning a credit rating to JSC Bank Bashcomsnabbank.
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.
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.V. Yakovenko
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.