The ‘B++' rating indicates that ‘Bank of Development of Technologies’ is qualified as a sufficiently reliable borrower (the highest sub-grade of the ‘B' grade).
The rating score of the Bank is supported by the steadily increasing equity capital of "Bank of Development of Technologies" in 2008-2011. In 2010, equity capital grew by 18.3% against 2.4% on average in Russia’s banking sector. This increase was mainly driven by the growing Tier 1 capital as the Bank’s authorized capital rose by RUB 71.8 million (21%).
Over the period under review (2008-2011), the share of Tier 1 capital was above 70%, which proves that the Bank's capital is of high quality. Also, most of the Tier 1 capital comes from the Bank’s authorized capital, a highly reliable source which totals RUB 410.8 million and accounts for 68.5% of the Bank’s equity capital, far above the average level in Russia’s banking system (25%).
Capital adequacy of "Bank of Development of Technologies" can be regarded as high. Over the period under review (2008-2011), CAR of the Bank (N1) met the Central Bank of Russia’s requirements and exceeded the average level in Russia’s banking system.
Income and profit of "Bank of Development of Technologies" are increasing. Net interest income is constantly on the rise. In 2010, it grew by RUB 22.4 million or 13%. Net interest income for H1 2011 totaled RUB 103.3 million increasing by 11% year-on-year. Net fee and commission income are also growing over the period under review: by 35% in 2009, by 43% in 2010. Overall, this is regarged as a positive signal, since the fee and commission income is stable, with low related risks.
Pre-tax profit of "Bank of Development of Technologies" has been increasing since 2007. In 2010, balance sheet profit of the Bank was RUB 40.6 million surpassing the 2009 result by 36%. The profit increase was driven by the growing income from lending, foreign exchange and other operations and decreasing losses on operations involving securities. Net profit of the Bank for 2010 increased by 28% to RUB 22.3 million. In the first half year 2011, the Bank’s net profit was RUB 6.6 million increasing the H1 2010 result more than twice.
Another argument supporting the Bank’s rating score is that its income structure was relatively stable over the period under review. Net interest incomes still prevail in the net income structure accounting for over 75% of them. As a whole, the high share of interest incomes indicates that the Bank prioritizes classical banking services.
Physical persons’ contributions are constantly increasing. In 2010, the growth rate was 204.6% (31.2% on average in Russia’s banking system). As of July 1, 2011, amount of contributions grew by RUB 106.5 million (36.3%) year-to-date against 7.1% in Russia’s banking sector.
Our analysis of the quality of assets and liabilities in terms of currency revealed that their balance is acceptable. On-call and overnight assets accounted for a considerable share of the current (liquid) assets, which naturally supports the rating score.
The Bank is expanding its customer pool. The number of accounts held by legal entities and physical persons is steadily increasing. For H1 2011, the number of accounts of legal entities increased by 6.3%, the number of physical persons’ accounts by 30.4%. The number of deposit accounts opened by legal entities and physical persons is also on an upward trend. Total amount of loans granted by the Bank (in absolute terms) has also been growing since 2010. In H1 2011, the total number of customers increased by 13%.
At the same time, the Bank’s customer base is still far from being significant as its financial capacities are limited by its low resource base and the high competition. The Bank’s dependence on the established customer pool constitutes a risk factor affecting the stability of funding sources.
Loan assets of "Bank of Development of Technologies" are of average quality, yet improved against the previous year. As of July 1, 2011, NPLs and problem loans account for 11% of the Bank’s loan receivables, which is higher than the average value in Russia’s banking system (about 8%). The share of doubtful loans is considerable, 19% against 11.8% on average in Russia’s banking sector. Class 1 loans and class 2 loans account for 70% of the Bank’s loan receivables, which is below the average value in Russia’s banking system (more than 80%). At the same time, arrears on the loans granted by "Bank of Development of Technologies" and other funds placed by as of July 1, 2011 is about 2% of the loan receivables, below the average value in Russia’s banking sector (4.5%).
"Bank of Development of Technologies" is currently active in one region, Moscow City, with the highest concentration of banks in Russia, hence the toughest competition from other banks including federal backbone banks. With the current market situation, strengthening its positions would be quite a challenge for "Bank of Development of Technologies", with considerable efforts required to develop, search and offer new services, to pursue a competitive tariff policy.
"Bank of Development of Technologies" has been active in the market of banking services since 2003 being a mid-sized bank in the amount and volume of operations among the Russian banks. As of July 1, 2011, the Bank’s assets total RUB 3.1 billion, equity capital is estimated at RUB 599.4 million. The Central Bank of the Russian Federation granted "Bank of Development of Technologies" banking license no. 3441 as of September 8, 2003. In 2009, the Banking Supervision Committee of the Central Bank permitted "Bank of Development of Technologies" to join the Deposit Insurance System (DIS). The Bank's auditor is Alt-Audit LLC.
The Bank provides comprehensive services to corporate customers, lends to small and middle-sized companies as well as innovative enterprises.
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This press release is based on the statement of assigning a credit rating to "Bank of Development of Technologies".
The rating score, along with any information and conclusions provided in this press release, only conveys our opinion on the Company's reliability and shall not be considered 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).
AK&M Ratings are recognized by the Central Bank of Russia (for providing unsecured lending facilities – Provision 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide business banking services to project and engineering entities implementing investment projects), the MICEX (as a prerequisite for including bonds in the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation base, for listing bonds and for providing access to the MICEX+ trading mode). Pursuant to an order of Russia's Government AK&M Ratings count for approving the capitalization increase procedure for banks. Besides, AK&M Rating Agency is recognized by AHML and accredited by SRO National Securities Market Association.
CJSC Analysis, Consulting and Marketing Rating Agency
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Press release by: Y.B. Kuznetsova
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.