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 RU000A0JUV08, RU000A0JUQ39, RU000A0JUMH3, RU000A0JU7Y9, RU000A0JT6J5, RU000A0ZYRX7, RU000A0ZYRY5, RU000A0JXP45, RU000A0ZYEE5, RU000A0ZZQU2, RU000A0ZZUL3, RU000A0ZZXM5, RU000A1002E8, RU000A1003R8, RU000A1007E7, RU000A100832, RU000A100AF3, RU000A100DX0, RU000A100HH4, RU000A100JB3, RU000A100VR4, RU000A101350, RU000A101TK1, RU000A101Z74, RU000A102DB2, RU000A102GJ8, RU000A102LU5), 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). The expected credit ratings of the subordinated bond issues (ISIN RU000A101EQ0, RU000A103K38), which should be Tier 2 capital instruments in case a relevant approval is granted by the Bank pf Russia, have been affirmed at eA+(RU).
The Bank 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 ASSESSMENT 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 12.5% as of June 30, 2021, according to the Bank, and N20.2 amounting to 11.9%, N1.2 amounting to 11% as of October 1, 2021), which enables the Bank to withstand an increase in the cost of risk at least by 500 bps and maintain its Tier 1 ratios within regulatory requirements. However, ACRA notes that the Bank’s ability to generate new capital is not high (over the past three years the Bank’s net interest margin (NIM) was 2.7% and the cost-to-income ratio (CTI) was 62%).
The adequate risk profile assessment stems from the Bank maintaining the share of problem and potentially problem, in ACRA's opinion, loans in its loan portfolio at an acceptable level of 5.2% as of June 30, 2021, including IFRS 9 Stage 3 loans and obtained or issued impaired loans amounted to 4.2% of the portfolio. Furthermore, the portfolio’s concentration on the 10 largest borrowers, according to the IFRS financial statements of the Bank for H1 2021, was 25.1%. The high level of specialized lending, mainly project finance, as well as direct investment (around 1.4x Tier 1 as of June 30, 2021), continue to constrain the risk profile assessment. The concentration on high-risk sectors (non-specialized lending to the construction and real estate industry) amounts to 0.2x Tier 1. The volume of market and operational risks 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 lenders, including the Gazprom Group, one of the most significant lenders. 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
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Maintaining strong competitive positions in key business segments;
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Maintaining cost of credit risk within 1%;
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Maintaining NIM within 2–3%;
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Maintaining Tier 1 and/or N1.2 above 9% 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:
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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);
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Substantial improvement in the ability to generate capital internally;
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Material increase in the operational efficiency.
A negative rating action may be prompted by:
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Decline in core capital adequacy caused by advanced growth of at-risk assets or significant losses (increased cost of risk) on the back of declining ability to generate capital internally;
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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
Standalone Creditworthiness Assessment (SCA): a+.
Adjustments: systemic importance, SCA + 3.
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-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-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 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 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-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).
Bank GPB (JSC), exchange-traded bond, series 001Р-19Р (RU000A102GJ8), maturity date: December 11, 2030, issue volume: RUB 15 bln — AA+(RU).
Bank GPB (JSC), exchange-traded bond, series 001Р-20Р (RU000A102LU5), maturity date: December 28, 2030, issue volume: RUB 2 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).
Expected credit rating rationale. According to the Bank of Russia and the issue documentation, Bank GPB (JSC)’s bond loans contain certain terms and conditions typical of subordinated loans as defined by Article 25.1 of Federal Law No. 395-1 dated December 12, 1990 “On Banks and Banking Activities” and Bank of Russia Regulation No. 646-P dated July 4, 2018 “On the methodology for determining the equity (capital) of credit institutions (Basel III).” Subject to approval from the Bank of Russia, these bond issues are expected to be categorized as a source of additional Tier 2 capital. According to ACRA’s methodology, the expected credit rating of this issue type is three notches below the Bank's final credit rating of AA+(RU).
Bank GPB (JSC), subordinated interest-bearing non-convertible uncertificated bond subject to centralized title registration, series GPB-T2-02E (RU000A101EQ0), maturity date: May 24, 2032, issue volume: EUR 100.05 mln — eА+(RU).
Bank GPB (JSC), subordinated interest-bearing non-convertible uncertificated bond subject to centralized title registration, series GPB-T2-04D (RU000A103K38), maturity date: May 14, 2032, issue volume: USD 100.05 mln — eА+(RU).
Regulatory disclosure
The credit rating of Bank GPB (JSC) and the credit ratings and expected credit ratings of abovementioned bonds of Bank GPB (JSC) have 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 and 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 on the National Scale of the Russian Federation was also used to assign credit ratings and expected credit ratings to the bond 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 ratings assigned to the bond issues ISIN RU000A0JUV08, RU000A0JUQ39, RU000A0JUMH3, RU000A0JU7Y9, and RU000A0JT6J5 were was published by ACRA for the first time 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 19, 2018; to ISIN RU000A0ZZXM5 — on December 13, 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; to ISIN RU000A101ER8 — on September 29, 2020; to ISIN RU000A102DB2 on November 20, 2020, to ISIN RU000A102GJ8 – om December 11, 2020, to ISIN RU000A102LU5 – on December 28, 2020. The expected credit ratings of bonds (ISIN RU000A101EQ0, RU000A103K38) were published by ACRA for the first time on November 10, 2021. The credit rating of Bank GPB (JSC) and its outlook and the credit ratings (except expected 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 next rating action with respect to expected credit ratings of the bonds (ISIN RU000A101EQ0, RU000A103K38) is expected within 180 days following the publication date of the press release on the assignment of expected credit ratings to the abovementioned bond issues (November 10, 2021).
The credit ratings and expected 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 and expected credit ratings are solicited, and Bank GPB (JSC) participated in their assignment.
In assigning the credit ratings and expected credit ratings, ACRA used only information, the quality and reliability of which was, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided additional services to Bank GPB (JSC). No conflicts of interest were identified in the course of the rating process.
