Press Releases / 12.05.2014
Press Release as of 12.05.2014
OJSC Eurasian bank
CJSC AK&M Rating Agency affirmed the national scale credit rating of OJSC Euroasian bank (license no. 969) at 'B++', tier 2; the outlook is stable.
The 'B++' rating indicates that OJSC Euroasian bank qualifies as a sufficiently reliable borrower. Risk of a delay in meeting obligations is moderate, full or partial debt restructuring risk is insignificant.
We regard the Bank's growing equity capital and authorized capital, high capital adequacy, strong liquidity position and high-quality loan portfolio as the main positive rating drivers.
In 2013, OJSC Euroasian bank added RUB 86.22 million in retained earnings to its equity capital increasing it by 15.3%. Early 2014 saw a significant increase in the Bank's authorized capital (by RUB 500 million). On April 1, 2104, the Bank's equity capital amounted to RUB 1,148.90 million against RUB 651.29 million at the start of 2014.
The growing equity and authorized capital, the high percentage of the authorized capital in the Bank's equity capital are contributing appreciably to the credit rating of OJSC Euroasian bank.
The Bank keeps its capital adequacy ratio and liquidity ratios comfortably high. In 2013 and in early 2014, the CAR ratio exceeded 30% on all the monthly reporting dates, being far above the average percentage in Russia's banking sector. The Bank's base capital adequacy and core capital adequacy ratios are high and meeting the regulatory requirements. As of April 1, 2014, the capital adequacy ratios of OJSC Euroasian bank were as follows: N1.0: 58.13%, N1.1, N1.2: 55.54%.
The Bank's liquidity metrics are also much above the average level. The N2 and N3 ratios which did not sink below 100% in 2013 and in early 2014 were incredibly high as of April 1, 2014 (691.32% and 589.55%, respectively).
OJSC Euroasian bank features an excellent loan book. As of April 1, 2014, grade 1 loans accounted for 63.0%, grade 2 loans for 22.8%, grade 3 loans for 13.5% of the total loan portfolio, the arrears being less than 1% of the total amount of loans. The Bank mainly lends to legal entities including construction & development, retail and industrial companies.
At the same time, the lower assets and customer deposits, the imbalance of liabilities towards major investors, and the poor profit performance in the opening quarter of 2014 are preventing a higher rating.
For the 9-month period in 2013, the Bank's assets decreased by RUB 669.82 million (24.3%) reaching RUB 2,090.43 million as of October 1, 2013. The fourth quarter of 2013 and the first months of 2014 did not see a significant increase in assets. The asset reduction is almost entirely attributable to the lower balance of legal entities' deposits offsetting the recent growth of personal deposits.
The high concentration of the Bank's liabilities within its major investors adds to the risk arising from the shrinking deposit balances of legal entities. Just as earlier, the 10 largest groups of depositors account for more than 90% of the Bank's total obligations .
OJSC Euroasian bank has posted an unimpressive net profit for the first quarter of 2014. According to the preliminary Q1 2014 statement, pre-tax profit reached RUB 2.25 million, net profit amounted to RUB 1.66 million, a strong decline since first quarter of 2013. The Bank's return on equity is way below the average level in Russia's banking sector, while the ROA ratio is slightly above the average percentage, due to the relatively small asset size.
Full name: Open Joint Stock Company Eurasian bank.
Short name: OJSC Eurasian bank.
The bank has been active in the market of banking services since 1990, the Central Bank of Russia's registration no. 969 as of November 27, 1990. The Bank has a general banking license as of April 8, 2010, a license for accepting money deposits, deposits of precious metals as of April 8, 2010. The Bank is a member of the compulsory deposit insurance scheme, DIS registration no. 538 as of January 27, 2005. Headquartered in Moscow, the Bank has no branches or satellite offices. OJSC Eurasian bank provides the whole range of services involving Russian rubles and foreign currencies, lends funds, and operates in the securities market.
This press release is based on the statement of assigning a credit rating to OJSC Eurasian bank.
The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Bank's creditworthiness and shall not be construed as advice on the purchase and sale of securities or the provision of loan facilities to the Bank.
AK&M Rating Agency will not incur any responsibility for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.
AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993. AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010).
CJSC AK&M Rating Agency
ul. Gubkina 3
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.