The credit rating assigned to JSC "Denizbank Moscow" (the Bank) is based on a high standalone creditworthiness assessment (SCA) that stems from a strong capital adequacy, satisfactory risk profile and a well-balanced liquidity and funding position. The likelihood of extraordinary support from Denizbank Financial Services Group (the Group) is assessed neutrally.
The Developing outlook reflects ACRA's opinion about possible credit rating upgrade / downgrade that may be caused by a potential change in the creditworthiness of Denizbank A.S., the supporting organization of the Bank (the Supporting Organization), in view of the following:
The Bank is a Russian subsidiary of a foreign bank, with its sole office in Moscow, wholly owned by Denizbank A.S. based in Turkey (including 51% through Denizbank AG based in Austria). The Bank ranks 119th by equity among Russian credit institutions. The Bank's core line of business includes comprehensive services (including lending and project financing, guarantees and letters of credit, cash and settlement services) to companies involved in export-import operations between Russia and Turkey and customers of the Group that are Turkish entities operating in Russia.
The likelihood of shareholder's extraordinary support is assessed neutral because the Bank's SCA is almost equal to the Supporting Organization's creditworthiness assessment.
On the other hand, the Bank's ties with the Supporting Organization are assessed as very strong, as:
The resulting assessment of country risk of jurisdictions of presence (mainly Turkey and Austria) of the foreign Supporting Organization generally corresponds to that of Russia.
In view of the above, ACRA does not upgrades the Bank's SCA.
Adequate business profile stems primarily from the Bank's strong franchise in servicing the Group's customer companies in Russia. The operating income diversification is low (the Herfindahl-Hirschman index is 0.31) due to the nature of the Bank's business. The system of corporate governance and strategic planning is assessed as adequate, given the significant control exercised by the Supporting Organization over the Bank's operations and many years of successful work experience of top managers in both the Bank and the Group.
Significant loss absorption buffer is driven by a high level of common capital under both Basel standards (Tier-1 CAR = 40.4% as of March 31, 2018) and regulatory standards (N1.2 = 22.2% as of August 1, 2018) that allows the Bank to withstand the growth in the cost of credit risk by more than 500 bps. The high average capital generation ratio (ACGR at 363 bps over the past five years) is a result of a stable profitability of business and no dividend payments. The operational efficiency is assessed as high, based on the three-year average CTI (about 24%) and NIM (5.5%).
Satisfactory risk profile assessment is underpinned by an acceptable share of potentially problem, in ACRA's opinion, loans in the Bank's loan portfolio: 10.3%, with no NPL90+ and restructured loans, and a low proportion of loans granted to companies operating in the high-risk industries: no more than 10% of common capital. At the same time, the concentration on the top 10 groups of customers is extremely high: 96% of the portfolio, which is somewhat offset by guarantees issued by the Supporting Organization for a number of loans. The Bank adheres to a conservative policy in its operations in the interbank market (21% of assets) and in the formation of liquidity portfolio consisting of highly liquid securities (14% of assets). The quality of the off-balance sheet contingent liabilities is assessed as adequate, as guarantees issued to construction companies comprise 30% of the Bank's common capital.
Adequate liquidity and funding position is due to the high ability of the Bank to perform its obligations on the 90-days horizon, given the significant surplus of short-term liquidity in both the base case scenario (about RUB 6 billion) and in the stressful scenario (30% of liabilities), as well as the possibility of instant attraction of funds through repurchase transactions (the securities portfolio is not encumbered). No imbalances are observed for longer periods (the long-term liquidity shortage indicator, LTLSI, is 117%), and we expect no large outflows of funds in the next 12 months.
The Bank attracts funding from its Supporting Organization (70% of liabilities) and through corporate deposits (another 25%); no funds are attracted from the Bank of Russia.
The Developing outlook assumes with equal probability either an upgrade or a downgrade of the rating within the 12–18-months horizon.
A positive rating action may be prompted by:
A negative rating action may be prompted by:
There are no outstanding issues.
The credit rating has been assigned 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, the Methodology for Analyzing Relationships between Rated Entities and Supporting Organizations outside 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 "Denizbank Moscow" for the first time. The credit rating and its outlook are expected to be revised within one year following the rating action date (September 4, 2018).
Disclosure of deviations from the approved methodologies. Within the funding and liquidity factor, the funding sources diversification assessment is upgraded one notch up because the significant dependence on the Supporting Organization has been taken into account in the concentration of funding sources on the largest group and top 10 groups of customers.
The credit rating was assigned based on the data provided by JSC "Denizbank Moscow", information from publicly available sources, as well as ACRA’s own databases. The rating analysis was performed using the IFRS financial statements of JSC "Denizbank Moscow" and the financial statements of JSC "Denizbank Moscow" drawn up in compliance with Bank of Russia Ordinance No. 4212-U dated November 24, 2016. The credit rating is solicited, and JSC "Denizbank Moscow" participated in its assignment.
No material discrepancies between the provided information and the data officially disclosed by JSC "Denizbank Moscow" in its financial statements have been discovered.
ACRA provided no additional services to JSC "Denizbank Moscow". No conflicts of interest were discovered in the course of credit rating assignment.
You will receive an email with a link to change your password
Полное использование материалов сайта разрешается только с письменного согласия правообладателя, АКРА (АО). Частичное использование материалов сайта (не более 30% текста статьи) разрешается только при условии указания гиперссылки на непосредственный адрес материала на сайте www.acra-ratings.ru . Гиперссылка должна быть размещена в подзаголовке или в первом абзаце материала. Размер шрифта гиперссылки не должен быть меньше шрифта текста используемого материала.