Russian rating agency RAEX (Expert RA) has reduced its outlook for Moscow-based Procommercebank's credit rating to negative, affirming the rating at B++ (satisfactory level of creditworthiness). Earlier the rating carried a developing outlook. The bank's rating was removed from rating watch.
The downgrade of the rating outlook was driven by potential deterioration of the performance of the bank's separate borrowers (Russian businesses established with the involvement of Turkish capital) as Russian and Turkish relations escalated, RAEX noted. The agency is of the view that this could lead to further deterioration of the bank's credit portfolio quality (the proportion of overdue loans granted to businesses and individual entrepreneurs jumped 3.1% to 7.9% in 4Q 2015), which, given the bank's modest equity (Rub 332.4 mln as of January 1, 2016) raises regulatory risks. Among negative factors, the agency also pointed to a drop in the proportion of highly liquid assets in gross assets (from 15.1% to 8.5% in 2015) and an unstable resource base (an outflow of drawn funds equaled 32.9% last year).
As for positive factors, the agency highlighted high capital adequacy (N1.0 stood at 42.4% at the beginning of 2016), and also well-balanced assets and liabilities by maturity in the horizon of up to 30 days (N3 was equal to 149.5% as of January 1) and of 12M+ (N4 equaled 33% as of the balance sheet date). In addition, the agency is upbeat about the bank's net interest margin (20.6% in 2015) and high information transparency.
