Fitch Ratings has affirmed AK BARS Bank’s (ABB, the Bank) Long-term Issuer Default Rating (IDR) at ’BB-’ with a Stable Outlook.
Key rating drivers, according to Fitch, indicate the moderate probability of support from the regional authorities which is based on region’s majotiry ownership and the operational control in the Bank, the track record of capital and liquidity support to date, and the Bank’s signifciant market share in Tatarstan.
Traditionally, Fitch underlined complexity of ownership structure and corporate governance as one of the concerns. However, the ratings are supported by ABB’s substantial market shares in its local region.
The Stable Outlook on the ratings of ABB reflects Fitch’s expectation that even in case of its parent’s rating downgrade by a notch the Bank’s ratings would remain at their current levels; however, a multi-notch downgrade of the region would most likely cause a downgrade of the Bank, but currently it is not envisaged.
As regards ABB’s VR, according to Fitch, it reflects the Bank’s signifciant risk of corporate lending and investment property exposures; Fitch highlights tightly managed capital and moderate pre-impairment profitability. On the positive side, it reflects reasonably performing retail loan book, and currently comfortable liquidity position, underpinned by inelastic customer funding and manageable short-term refinancing needs.
In the meantime, the Bank managed to sell RUB12 bn of non-core asset in 2013.
The liquidity and refinacning risks, according to Fitch, are moderate in the near term.
AK BARS Bank is considering Fitch Rating’s comments as a guideline for improvement and maintaining positive rating trend, ensuring opportunities for developing business.
Fitch Ratings press-release is available through.