Press Releases / 28.10.2014
Press Release as of 28.10.2014
CB "Trust Capital Bank" CJSC
CJSC AK&M Rating Agency affirmed the national scale credit rating assigned to CB Trust Capital Bank CJSC at 'B+', revised the outlook to positive.
CB Trust Capital Bank CJSC has been operating in the market of banking services since 1994. Headquartered in Moscow, the Bank has branches in St. Petersburg and Voronezh.
CB Trust Capital Bank CJSC ranks in the 600-700 range of Russian banks in terms of asset size and equity capital size.
The core business of the Bank is the provision of all kinds of banking products to corporate clients and lending to private customers. The bank not a member of the deposit insurance system and does not possess a license to accept money deposits from individuals.
The Bank's shareholding structure changed in April 2014. The new owners' arrival caused a change in the Bank's development strategy, now prioritizing services in the segment of transport logistics where the owners are running their core business. The client base reorganization weakened the Bank's position in mid-2014 in the wake of an outflow of customer funds and a loan portfolio restructuring. All of the Bank's key performance indicators went down then. However, improvements the Bank's performance have been obvious since September 2014.
We regard the Bank's high capital adequacy, profitable operations and a stronger loan portfolio as the key positive rating drivers.
Equity capital adequacy ratio (N1.0) of CB Trust Capital Bank stayed low-volatile and below the average level in Russia's banking sector for the last 3 years. In 2014, the outstripping growth of equity capital compared with the Bank's balance sheet assets gave rise to an upward trend. As of September 1, 2014, the N1.0 ratio reached 25.7% exceeding the average percentage in Russia's banking sector.
Despite the business restructuring, the Bank's financial result stayed positive and even saw a steady growth.
The Bank's debt portfolio is of acceptable quality (loans of quality grades 1 and 2 accounting for ca. 77.4%); the share of non-performing loans went down to 6.3% in 2014. Arrears on the Bank's loans are decreasing simultaneously with the loan portfolio improvements.
At the same time, the rating is under pressure of insufficiently high operational efficiency, a reduction in the amount of net loans receivable and shrinking deposits of legal entities.
At the end of the second quarter of 2014, the Bank's ROA ratio was 1.1%, ROE ratio was 4.6%, both far below the average levels in Russia's banking sector (1.7% and 13.6%, respectively). It should however be noted that the Bank's profit per ruble invested (ROIC ratio) is looking up in 2014.
Among CB Trust Capital Bank's assets, net loans receivable exceeded RUB 1.2 billion until 2014. In the first half of this year, they decreased by 26.5% to RUB 980 million, primarily due to a reduction in the amount of lending to legal entities by 21.5%.
We regard the lack of stability on the liabilities side as a risk factor for the Bank. Deposits of legal entities, the key funding source for CB Trust Capital Bank, kept going down since the start of the year and reached the lowest value in September (RUB 842 million, -46%). However, the trend turned positive after that; as of October 1, 2014, the Bank had a total of RUB 1,013 million in legal entities' deposits at disposal.
The positive outlook on the Bank's rating reflects our expectations of improvements in a number of performance indicators. The Bank's new owners and management team are consistently implementing an ambitious development strategy, with obvious positive outcomes in the last two months. The Bank intends to increase its authorized capital significantly in the next 3-4 months and to enter the retail banking market in 2015 obtaining the corresponding license and joining the deposit insurance system. We believe that CB Trust Capital Bank will substantially strengthen its position in the market of banking services within 6 months following the rating assignment.
CB Trust Capital Bank CJSC possesses a license for baking operations with funds denominated in Russian rubles and foreign currencies (without accepting money deposits from individuals) as of 03/05/1994.
CB Trust Capital Bank CJSC headquartered in Moscow has branches in St. Petersburg and Voronezh.
The Bank provides all types of services involving Russian rubles and foreign currencies, lends to legal entities and individuals.
This press release is based on the Statement of assignment of a credit rating to CB Trust Capital Bank CJSC.
The 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 a recommendation to purchase or sell securities, or to lend funds.
AK&M Rating Agency shall not be held liable for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.
CJSC Analysis, Consulting and Marketing Rating Agency is a leading independent national rating agency engaged in rating activities since 1993. CJSC AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010) and is on the Central Bank of Russia's Register of Accredited Rating Agencies.
CJSC AK&M Rating Agency
Ul. Gubkina 3, Moscow, Russia
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.