Moody's upgrades Baseline Credit Assessment and changes to positive outlook on Ak Bars Banks’s deposit rating

On 10 July, 2018 Moody’s Investors Service upgraded to b3 from caa1 the Baseline Credit Assessment (BCA) of Ak BarS Bank. The rating agency also affirmed Ak Bars Bank’s long- term local and foreign currency deposit rating at B2 and changed the outlook to positive from stable. Moody’s also upgraded to B1 from B2 the long-term local and foreign currency Counterparty Risk Rating of Ak Bars Bank along with the upgrade to B1(cr) from B2(cr) the Bank’s long-term Counterparty Risk Assessment.

According to Moody’s, the upgrade of Ak Bars’ BCA resulted from the sizeable restructuring of the balance-sheet and capital increase amid stabilizing macroeconomic conditions in Russia. Ak Bars’ stable funding profile and comfortable liquidity position also encourage the upgrade of the Bank’s BCA.

The rating agency noted an improvement in the quality of loan portfolio. The Bank’s problem loans decreased to 9.7% of gross loans as of year-end 2017 from 15.2% at year-end 2016. The improvement was a result of the problem loan sales and the repayments of decent risky exposures. Moody’s expects further gradual asset quality improvement of the Bank.

Moody’s upgrade of the outlook of Ak Bars’ long-term local and foreign currency deposit rating reflects the rating agency opinion on possible rating upgrade in the event of further improvement in the Bank’s standalone financial profile, the bank’s loan book quality and strengthening of its core recurring profitability.

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