ACRA assigns status "Rating under revision: negative" to NEFTEPROMBANK

The assignment of the status "Rating under revision: negative" to the credit rating of NEFTEPROMBANK (hereinafter, NEFTEPROMBANK, or the Bank) reflects ACRA's opinion on the possible change in the Bank's credit rating in the short term due to a decrease in the volume of disposable equity.

Key rating assessment factors

The B-(RU) credit rating is based on the Bank’s moderately low business profile assessment, weak capital position, critical risk profile assessment, and adequate funding and liquidity position.

According to the Bank of Russia, in February 2021, the volume of disposable common equity of NEFTEPROMBANK decreased from RUB 1,034.7 bln down to RUB 618.6 mln. As a result, the Bank's N1.2 ratio decreased from 10.91% as of February 1, 2021 to 6.52% as of March 1, 2021.

According to the Bank, after the decrease, it took measures to restore the volume of equity and the capital adequacy ratios. At the same time, the Agency notes that the decrease in equity has a negative impact on NEFTEPROMBANK's franchise (its position in the industry and ability to develop within the frames of its strategy), which may lead to a downgrade of the business profile score and, as a consequence, the credit rating.

In addition, ACRA is of the opinion that the current situation increases the likelihood that the regulatory risk will materialize.

The status "Rating under review: negative" reflects the need for the Agency to conduct additional analysis of the financial condition of NEFTEPROMBANK. ACRA plans to review the status on the Bank's credit rating within the next 90 days.

Key assumptions

  • Compliance with the requirements of the Bank of Russia related to capital adequacy and liquidity, as well as with other regulatory requirements.

Potential outlook or rating change factors

The “Rating under revision: negative” status assumes that the rating may be downgraded within the next 90 days.

Removal of the “Rating under revision: negative” status and affirmation of the credit rating may be prompted by:

  • Increase in the volume of internal funds (primarily equity);
  • Stabilization of capital adequacy ratios.

Removal of the “Rating under revision: negative” status and downgrade of the rating may be prompted by:

  • Loss of a significant share of its client base in active and passive operations;
  • Decline in the Bank’s capital adequacy ratios and liquidity.

Rating components

SCA: b-.

Adjustments: none.

Support: none.

Issue ratings

No outstanding issues have been rated.

Regulatory disclosure

The credit rating has been assigned to NEFTEPROMBANK under the national scale for the Russian Federation based on the Methodology for Credit Ratings Assignment to Banks and Bank Groups under the National Scale for the Russian Federation and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.

The credit rating of NEFTEPROMBANK was published by ACRA for the first time on October 29, 2020. The credit rating and its outlook are expected to be revised within 90 days following the publication date of this press release.

The credit rating was assigned based on the data provided by NEFTEPROMBANK, information from publicly available sources, as well as ACRA’s own databases. The rating analysis was performed using the IFRS statements of NEFTEPROMBANK and the financial statements of NEFTEPROMBANK drawn up in compliance with Bank of Russia Ordinance No. 4927-U dated October 8, 2018. The credit rating is solicited, and NEFTEPROMBANK participated in its assignment.

In assigning the credit rating, ACRA used only information, the quality and reliability of which was, in ACRA's opinion, appropriate and sufficient to apply the methodologies.

ACRA provided no additional services to NEFTEPROMBANK. No conflicts of interest were discovered in the course of credit rating assignment.

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