Training on Forecasting, April 7–8

ACRA assigns BB(RU) to JSC CB «Poidem!», outlook Stable

The credit rating assigned to JSC CB «Poidem!» (hereinafter - the Bank, CB «Poidem»!, the Credit Institution) is due to the relatively low assessment of its business profile, satisfactory assessment of its capital adequacy and risk profile, as well as suitable assessment of its funding and liquidity.

JSC CB «Poidem!»  is ranked 178th in terms of assets among banks in Russia. The main activity of the Bank is retail lending (cash and credit card loans).

Key rating assessment factors

The moderately low business profile assessment (bb) is due to CB «Poidem!» limited competitive positions in Russia’s financial service market (ranked 162nd in terms of shareholder capital), as well as low diversification of operating income, which is formed mainly by interest income on the loans of individuals. CB «Poidem!” strategy stipulates further development in retail. ACRA evaluates CB «Poidem!» development plans as realistic and consistent with macroeconomic conditions. In ACRA’s opinion, the Bank’s corporate management corresponds with its business and objectives. CB «Poidem!» was previously part of the Probusinessbank group (whose license was revoked on August 12, 2015) and during the sale of assets of the former group, the Bank was acquired by a group of individuals. The shares of shareholders are divided as follows: Valery Kuzovlev – 33.5%; Mikhail Berezov – 19.9%; Vladimir Voeikov – 17.9%; Natalia Varodi – 8.7%; Dmitry Dyakin – 6.7%; Inna Ryabova – 6.7%, Leonid Batsev – 6.7%. Overall, ACRA evaluates CB «Poidem!» structure of owners as transparent.

The Bank's satisfactory capital position is primarily determined by the high marginality of its operations, which makes it possible to create reserves to cover problematic debts at the expense of net interest income. As a result, the Credit Institution can withstand the growth of credit risk in the range of 300-500 b. p. without violating capital adequacy ratios. According to the results for 2015-2017, net interest margin (NIM) amounted to more than 20%. However, according to the results from 2014 to the first half of 2018, the value of the average capital generation ratio reached 99 b. p., which in conjunction with the capital adequacy ratio (H1.2) at the level of 8.29% (as of September 1, 2018) makes it possible to assess the basic level of adequacy as satisfactory.

ACRA assesses the Bank’s risk profile as satisfactory, given the loan portfolio’s high level of granularity with a relatively high loan portfolio quality. The retail nature of operations allows CB «Poidem!» to maintain a low concentration on the ten largest borrowers (0.4% of the portfolio as of July 1, 2018). The NPL91–360 debt volume amounts to 6.6%. At the same time, the total volume of NPL 90+ loans to individuals exceeds 22.8%, which is explained by the refusal to write off such loans and the active overdue debt enforcement practice. ACRA notes the full debt coverage with npl90 + reserves. ACRA also draws attention to the rapid growth of new loans in 2018, which limits the final assessment of the quality of the Bank's loan portfolio. The bank places free liquidity in credit institutions with a high level of financial stability. ACRA evaluates the Credit Institution’s risk management as satisfactory, taking into account the level of credit issuance control and credit risk monitoring systems.

The Bank’s liquidity position, in ACRA’s opinion, is strong. This is primarily due to the balance of its assets and liabilities by maturity. According to ACRA’s assessments, on June 30, 2018, in the base scenario of calculating the short-term liquidity deficit, CB «Poidem!» showed an excess of short-term liquidity (RUB 1.96 bln); in the stressful scenario, the short-term liquidity deficit was 10.8% of liabilities. The Bank maintains a significant amount of cash on its balance sheet, as well as on accounts with the Central Bank and credit institutions with a high level of financial stability (about 20% of liabilities).

The quality of the Bank’s funding is assessed as neutral. The main source of CB «Poidem!» funding is funds from individuals (as of July 1, 2018, the volume of which exceeded 93% of liabilities). However, the retail nature of the Bank’s activities causes low dependence on the largest creditors (depositors). Funds of the largest and ten largest creditors (depositors) form respectively 0.1 and 0.6% of the volume of all raised funds.

Key assumptions

  • Maintaining the current business model of the Bank within the 12 to 18-month horizon;
  • Cost of credit risk within the 5% range;
  • Maintaining the profitability of operations;
  • Capital adequacy (H1.2) at a level no lower than 8% within the 12-month horizon.

Potential outlook or rating change factors

The Stable outlook assumes that the rating will most likely stay unchanged within the 12 to 18-month horizon.   

A positive rating action may be prompted by:

  • Growth in the capital adequacy ratio (H1.2);
  • Improvements in the Bank’s capabilities to generate shareholder capital;
  • Decrease in dependency on funds from individuals as a main source of funding.

A negative rating action may be prompted by:

  • Deterioration in the quality of the credit portfolio;
  • Decrease in profitability;
  • Deterioration in liquidity position;
  • Growth in dependency on funds of the largest and ten largest creditors (depositors).

Rating components

Standalone creditworthiness assessment (SCA): bb.

Adjustments: none.

Issue ratings

No outstanding issues have been rated.

Regulatory disclosure

The credit rating has been assigned under the national scale for the Russian Federation and is 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 Analytical Credit Rating Agency within the Scope of Its Rating Activities.

The credit rating has been assigned to JSC CB «Poidem!» for the first time. The credit rating and its outlook are expected to be revised within one year following the rating action (October 25, 2018).

The assigned credit rating is based on the data provided by JSC CB «Poidem!», information from publicly available sources, as well as ACRA’s own databases. The rating analysis was performed using IFRS consolidated statements of JSC CB «Poidem!» and statements of JSC CB «Poidem!» composed in compliance with the Bank of Russia Ordinance No. 4212-U dated November 24, 2016. The credit rating is solicited, and JSC CB «Poidem!» participated in its assignment.

No material discrepancies between the provided data and the data officially disclosed by JSC CB «Poidem!» in its financial statements have been discovered.

ACRA provided no additional services to JSC CB «Poidem!». No conflicts of interest were discovered in the course of credit rating assignment.

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