The credit rating of Bank GPB (JSC) (hereinafter, the Bank) is based on the Bank’s strong and stable business profile, adequate capital adequacy and risk profile, and satisfactory liquidity and funding positions. In addition, the rating is supported by the Bank’s critical systemic importance for the Russian financial market.
The credit ratings of the Bank’s bond issues (ISIN RU000A0ZYHK5, RU000A0ZYM05, RU000A0JUV08, RU000A0JUQ39, RU000A0JUMH3, RU000A0JU7Y9, RU000A0JT6J5, RU000A0ZYRX7, RU000A0ZYRY5, RU000A0JXP45, RU000A0ZYEE5, RU000A0ZZQU2, RU000A0ZZUL3, RU000A0ZZXM5, RU000A1000A0, RU000A1002E8, RU000A1003R8, RU000A1007E7, RU000A100832, RU000A100AF3, RU000A100DX0, RU000A100HH4, RU000A100JB3, RU000A100VR4, RU000A101350, RU000A101TK1, RU000A101Z74, RU000A102DB2), which are senior unsecured debt instruments, have been affirmed at AA+(RU). The credit rating of the subordinated bond issue (ISIN RU000A101ER8), which is a Tier 2 capital instrument, has been affirmed at A+(RU).
Gazprombank is one of Russia’s largest universal financial institutions that specializes in lending and other banking services to large businesses. The largest shareholders of the Bank are PJSC Gazprom and NPF GAZFOND.
Key rating assessments factors
The strong business profile is based on the Bank’s sustainable franchise, primarily in the area of lending to large businesses. ACRA believes that one of the Bank’s strongest competitive advantages is its close operational and strategic alliance with PJSC Gazprom (AAA(RU), outlook Stable). The Bank is an industry leader in terms of capital and assets. Its business profile assessment is further supported by the high quality of its corporate governance and adequate development strategy.
Adequate capital adequacy assessment. The Bank maintains substantial capital adequacy ratios (Tier 1 amounting to 12% as of June 30, 2020, according to the Bank, and N1.2 amounting to 10.4% as of October 1, 2020), which enables the Bank to withstand a significant increase in the cost of risk and maintain its N1.2 ratio within regulatory requirements. However, ACRA notes that the Bank’s ability to generate new capital is low (over the past three years the Bank’s net interest margin (NIM) was 2.8% and the cost-to-income ratio (CTI) was 58%).
The adequate risk profile assessment stems from the Bank maintaining the share of problem loans in its loan portfolio at an acceptable level (Stage 3 loans and obtained or issued impaired loans as per IFRS 9 amounted to 4.9% of the portfolio as of June 30, 2020). Furthermore, the portfolio’s concentration on the 10 largest groups of borrowers is heightened (around 25%). The high level of specialized lending (mainly represented by project finance), which has demonstrated strong growth over the past 12 months, as well as direct investment (around 1.4x Tier 1 as of June 30, 2020), continue to constrain the risk profile assessment. The concentration on high-risk sectors (non-specialized lending to the areas of construction and real estate operations) amounts to 0.2x Tier 1. The volume of market and operational risk is acceptable.
Adequate liquidity management policy. The Bank’s liquidity position is assessed as sufficiently comfortable. In ACRA’s base case and stress scenarios, the Bank has no problems withstanding a significant outflow of customer funds. According to ACRA, major repayments expected within the 12 to 18-month horizon will not impair the Bank’s liquidity.
The satisfactory funding profile is determined by increased concentration on the 10 largest groups of creditors, the most significant of which is the Gazprom Group accounting for 9.6% of total liabilities as of June 30, 2020. ACRA notes that the Bank’s relationship with this group of creditors is stable and predictable. ACRA expects the Bank to remain dependent on corporate funds, whose stably share exceeds 60% of all liabilities.
Critical systemic importance of the Bank for the Russian financial market. According to ACRA, the Bank’s default could trigger a systemic crisis in certain segments of the Russian banking market and a number of industries, which would have a negative impact on the financial stability of the Russian economy. ACRA notes the critical importance of the Bank’s uninterrupted operations for PJSC Gazprom and a number of leading companies in the national economy. The Bank of Russia categorizes the Bank as a systemically important credit institution.
Key assumptions
- Maintaining strong competitive positions in key business segments;
- Maintaining cost of credit risk within 1%;
- Maintaining net interest margin within 2–3%;
- Maintaining Tier 1/N1.2 above 8% within the 12 to 18-month horizon.
Potential outlook or rating change factors
The Stable outlook assumes that the rating will most likely stay unchanged within the 12 to 18-month horizon.
A positive rating action may be prompted by:
- Improved risk profile factors (significant reduction of problem debt, the concentration of the loan portfolio on the ten largest groups of borrowers, and the volume of specialized lending and direct investment);
- Substantial improvement in the ability to generate internal capital.
A negative rating action may be prompted by:
- Decline in core capital adequacy caused by advanced growth of at-risk assets or significant losses (increased cost of risk);
- Deteriorating operational efficiency;
- Deteriorating quality of the loan portfolio with regard to problem loans or continued growth of specialized lending and direct investment, as well as aggressive growth in the volume of lending.
Rating components
SCA: a+.
Adjustments: systemic importance, +3 notches.
Support: none.
Issue ratings
Rationale. The issues listed below are senior unsecured debt instruments of Bank GPB (JSC). Due to the absence of either structural or contractual subordination of the issues, ACRA regards them as equal to other existing and future unsecured and unsubordinated debt obligations of the Bank in terms of priority. According to ACRA’s methodology, the credit ratings of the issues are equivalent to that of Bank GPB (JSC), i.e. AA+(RU).
Key issue properties
Bank GPB (JSC), exchange-traded bond, series BO-15 (RU000A0ZYHK5), maturity date: December 1, 2020, issue volume: RUB 10 bln — АА+(RU).
Bank GPB (JSC), exchange-traded bond, series BO-25 (RU000A0ZYM05), maturity date: December 26, 2020, issue volume: RUB 5 bln — AA+(RU).
Bank GPB (JSC), exchange-traded bond, series BO-10 (RU000A0JUV08), maturity date: September 26, 2024, issue volume: RUB 10 bln — AA+(RU).
Bank GPB (JSC), exchange-traded bond, series BO-09 (RU000A0JUQ39), maturity date: June 27, 2024, issue volume: RUB 10 bln — AA+(RU).
Bank GPB (JSC), exchange-traded bond, series BO-08 (RU000A0JUMH3), maturity date: May 23, 2024, issue volume: RUB 10 bln — AA+(RU).
Bank GPB (JSC), exchange-traded bond, series BO-07 (RU000A0JU7Y9), maturity date: October 22, 2023, issue volume: RUB 10 bln — AA+(RU).
Bank GPB (JSC), certified interest-bearing bearer bond, series 12 (RU000A0JT6J5), maturity date: October 6, 2022, issue volume: RUB 10 bln — AA+(RU).
Bank GPB (JSC), exchange-traded bond, series BO-18 (RU000A0ZYRX7), maturity date: February 12, 2023, issue volume: RUB 10 bln — AA+(RU).
Bank GPB (JSC), exchange-traded bond, series BO-19 (RU000A0ZYRY5), maturity date: February 12, 2023, issue volume: RUB 10 bln — AA+(RU).
Bank GPB (JSC), exchange-traded bond, series BO-16 (RU000A0JXP45), maturity date: April 18, 2024, issue volume: RUB 10 bln — AA+(RU).
Bank GPB (JSC), exchange-traded bond, series BO-17 (RU000A0ZYEE5), maturity date: October 31, 2024, issue volume: RUB 10 bln — AA+(RU).
Bank GPB (JSC), exchange-traded bond, series 001Р-01Р (RU000A0ZZQU2), maturity date: October 26, 2023, issue volume: RUB 8 bln — AA+(RU).
Bank GPB (JSC), exchange-traded bond, series 001Р-02Р (RU000A0ZZUL3), maturity date: November 20, 2023, issue volume: RUB 10 bln — AA+(RU).
Bank GPB (JSC), exchange-traded bond, series 001Р-03Р (RU000A0ZZXM5), maturity date: June 13, 2022, issue volume: RUB 7 bln — AA+(RU).
Bank GPB (JSC), exchange-traded bond, series 001Р-04Р (RU000A1000A0), maturity date: December 28, 2020, issue volume: RUB 2 bln — AA+(RU).
Bank GPB (JSC), exchange-traded bond, series 001Р-05Р (RU000A1002E8), maturity date: January 31, 2023, issue volume: RUB 10 bln — АА+(RU).
Bank GPB (JSC), exchange-traded bond, series 001Р-06Р (RU000A1003R8), maturity date: February 14, 2024, issue volume: RUB 5 bln — АА+(RU).
Bank GPB (JSC), exchange-traded bond, series 001Р-07Р (RU000A1007E7), maturity date: March 26, 2023, issue volume: RUB 10 bln — АА+(RU).
Bank GPB (JSC), exchange-traded bond, series 001Р-08Р (RU000A100832), maturity date: April 2, 2023, issue volume: RUB 6 bln — АА+(RU).
Bank GPB (JSC), exchange-traded bond, series 001Р-09Р (RU000A100AF3), maturity date: April 23, 2022, issue volume: RUB 15 bln — АА+(RU).
Bank GPB (JSC), exchange-traded bond, series 001Р-10Р (RU000A100DX0), maturity date: November 29, 2021, issue volume: RUB 5 bln — АА+(RU).
Bank GPB (JSC), exchange-traded bond, series 001Р-11Р (RU000A100HH4), maturity date: July 1, 2024, issue volume: RUB 10 bln — АА+(RU).
Bank GPB (JSC), exchange-traded bond, series 001Р-12Р (RU000A100JB3), maturity date: January 5, 2025, issue volume: RUB 5 bln — АА+(RU).
Bank GPB (JSC), exchange-traded bond, series 001Р-13Р (RU000A100VR4), maturity date: September 30, 2023, issue volume: RUB 5 bln — АА+(RU).
Bank GPB (JSC), exchange-traded bond, series 001Р-14Р (RU000A101350), maturity date: November 22, 2024, issue volume: RUB 10 bln — АА+(RU).
Bank GPB (JSC), exchange-traded bond, series 001Р-15Р (RU000A101TK1), maturity date: June 19, 2022, issue volume: RUB 5 bln — АА+(RU).
Bank GPB (JSC), exchange-traded bond, series 001Р-17Р (RU000A101Z74), maturity date: July 31, 2030, issue volume: RUB 10 bln — АА+(RU).
Bank GPB (JSC), exchange-traded bond, series 001Р-18Р (RU000A102DB2), maturity date November 20, 2030, issue volume: RUB 20 bln — АА+(RU).
Rationale. The issue is subordinated debt of Bank GPB (JSC) with respect to senior unsecured creditors. According to ACRA’s methodology, the credit rating of the bond issue, which is a Tier 2 capital instrument, is three notches below the Bank’s final credit rating of AA+(RU).
Bank GPB (JSC), subordinated interest-bearing bond, series GPB-T2-03D (RU000A101ER8), maturity date: December 20, 2030, issue volume: USD 250.25 mln — А+(RU).
Regulatory disclosure
The credit ratings have been assigned to Bank GPB (JSC) and the bonds issued by Bank GPB (JSC) 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 and the Key Concepts Used by the Analytical Credit Rating Agency Within the Scope of Its Rating Activities. The Methodology for Assigning Credit Ratings to Individual Issues of Financial Instruments Under the National Scale for the Russian Federation was also used to assign credit ratings to the issues listed above.
The credit rating assigned to Bank GPB (JSC) was published by ACRA for the first time on November 24, 2016. The credit rating assigned to the bond issue ISIN RU000A0ZYHK5 was published by ACRA for the first time on December 1, 2017; to ISIN RU000A0ZYM05 — on December 25, 2017; to ISIN RU000A0JUV08, RU000A0JUQ39, RU000A0JUMH3, RU000A0JU7Y9, and RU000A0JT6J5 — on December 28, 2017; to ISIN RU000A0ZYRX7 and RU000A0ZYRY5 — on February 9, 2018; to ISIN RU000A0JXP45 — on April 24, 2017; to ISIN RU000A0ZYEE5 — on October 30, 2017; to ISIN RU000A0ZZQU2 — on October 25, 2018; to ISIN RU000A0ZZUL3 — on November 11, 2018; to ISIN RU000A0ZZXM5 — on December 13, 2018; to ISIN RU000A1000A0 — on December 28, 2018; to ISIN RU000A1002E8 — on January 30, 2019; to ISIN RU000A1003R8 — on February 14, 2019; to ISIN RU000A1007E7 — on March 26, 2019; to ISIN RU000A100832 — on April 2, 2019; to ISIN RU000A100AF3 — on April 23, 2019; to ISIN RU000A100DX0 — on May 29, 2019; to ISIN RU000A100HH4 — on July 1, 2019; to ISIN RU000A100JB3 — on July 5, 2019; to ISIN RU000A100VR4 — on September 30, 2019; to ISIN RU000A101350 — on November 21, 2019; to ISIN RU000A101TK1 — on June 18, 2020; to ISIN RU000A101Z74 — on July 30, 2020; and to ISIN RU000A101ER8 — on September 29, 2020; to ISIN RU000A102DB2 on November 20, 2020. The credit rating of Bank GPB (JSC) and its outlook and the credit ratings of the bonds issued by Bank GPB (JSC) are expected to be revised within one year following the publication date of this press release.
The credit ratings were assigned based on the data provided by Bank GPB (JSC), information from publicly available sources, as well as ACRA’s own databases. The rating analysis was performed using the consolidated IFRS statements of the Gazprom Group and the financial statements of Bank GPB (JSC) drawn up in compliance with Bank of Russia Ordinance No. 4927-U, dated October 8, 2018. The credit ratings are solicited, and Bank GPB (JSC) participated in their assignment.
No material discrepancies between the provided information and the data officially disclosed by Bank GPB (JSC) in its financial statements have been discovered.
ACRA provided additional services to Bank GPB (JSC). No conflicts of interest were discovered in the course of credit rating assignment.
