Moscow, September 20, 2016: S&P Global Ratings has affirmed the long- and short-term counterparty credit ratings of Vozrozhdenie Bank at ‘BB-/B’ on the global scale and ‘ruAA-‘ long-term rating on the Russia national scale.
The ratings outlook remained “negative” reflecting the challenges of the difficult operating environment in Russia, which could constrain profitability due to high credit costs and potentially erode the bank’s capital buffers.
“We continue to view Vozrozhdenie Bank's strategy as relatively conservative, which explains the bank's generally stable performance through the cycle,” commented Sergey Voronenko, Deputy Head of Financial Institutions Rating Group at the Moscow office of S&P Global. “The bank's revenue base is broadly stable, indicating more sustainable earnings capacity in its core banking business than many of its peers' ".
Andrey Shalimov, Deputy Chairman of the Management Board commented, “Today we are working in tough economic conditions. Thus S&P’s high recognition of our conservative business approach and good risk management is very much appreciated. Recently we’ve been focused on supporting interest income, recovering fee-income generation capacity as well as timely revealing and provisioning of problems in a “matured” loan portfolio. Rating affirmation provides evidence of our strong positions in regions where we have branches and of our clients’ loyalty which contributes to the stability of the bank’s solid funding base. This encourages us to continue our development of SME and retail businesses”.
The agency also acknowledged the bank to be a highly strategically important member of the consolidated Promsvyaz Capital banking group and positively assessed that the new majority shareholder would unlikely make significant changes to Vozrozhdenie Bank's historically prudent and well-articulated strategy, which has allowed it to post recurring, healthy operating profits in previous years.
According to the preliminary reporting (published form) under the Russian Accounting Standards (RAS), PSB net profit for 9M 2016 amounted to RUB 2.0 bn. Income from core banking operations (interest income and fee and commission income) increased by 21% to RUB 36.9 bn.