The credit rating of Bank GPB (JSC) (hereinafter, Gazprombank, or the Bank) is based on the Bank’s strong and stable business profile, satisfactory capital adequacy assessment, satisfactory liquidity and funding position, and an adequate risk profile. The rating is additionally supported by the possibility of Gazprombank receiving extraordinary support from the state, which has entrusted the Bank with carrying out special functions and is interested in it maintaining stable creditworthiness.
The credit ratings of the bond issues (ISIN RU000A0JUV08, RU000A0JUQ39, RU000A0JUMH3, RU000A0JXP45, RU000A0ZYEE5, RU000A0ZZUL3, RU000A1003R8, RU000A100HH4, RU000A100JB3, RU000A101Z74, RU000A102DB2, RU000A102GJ8, RU000A102LU5, RU000A104B46, RU000A101350, RU000A105GW4, RU000A1064G3), which are senior unsecured debt instruments, have been affirmed at AA+(RU). The credit ratings of the subordinated bond issues (ISIN RU000A101ER8, RU000A101EQ0, RU000A103K38), which are Tier 2 capital instruments, have been affirmed at A+(RU).
Gazprombank is one of Russia’s largest universal financial institutions that specializes in lending and other banking services for large businesses and develops its retail line of business, including private banking.
key assessment factors
The strong business profile is based on Gazprombank’s sustainable franchise, primarily in the area of lending to large businesses. The Bank is an industry leader in terms of capital and assets, having expanded its market share in a range of business segments in 2022–2023. ACRA believes that one of the Bank’s strongest competitive advantages is its close operational and strategic alliance with a major corporation that enjoys strong creditworthiness. Its business profile assessment is further supported by the high quality of its corporate governance and adequate development strategy. ACRA notes that the share of fee income in the total revenues from operations is growing, which is positive for the diversification assessment.
Satisfactory capital adequacy assessment. ACRA notes that due to a rapid growth of assets, the Bank's capital adequacy ratios are decreasing, including the N1.2 ratio that fell from 8.54% as of January 1, 2023 to 7.89% as of October 1, 2023. At the same time, ACRA notes an increase in the Bank's capital generating capacity in 2023, which partially offsets a shrink of the loss absorption buffer. According to the RAS financial statements, for the first nine months of 2023, the Bank's financial result after taxes amounted to RUB 167 bln. Profitability growth is supported by both an increase in the interest margin and a stable quality of the loan portfolio, which allows avoiding the need to increase loss provisions.
The adequate risk profile assessment stems from the Bank maintaining a low share of non-performing and potentially non-performing, in ACRA’s opinion, loans in its loan portfolio as of June 30, 2023. At the same time, the Agency notes a certain increase in the concentration on the ten largest borrowers. The high level of specialized lending (mainly project finance), which continued to grow in 2022–2023 continues to constrain the risk profile assessment. The credit quality of such loans has remained high, which confirms the adequate score for the risk management system. The risks of related-party lending are generally mitigated by the high credit quality of borrowers. The volume of market and operational risks is acceptable.
Adequate liquidity management policy. The Bank’s liquidity position is assessed as sufficiently comfortable. The Bank has no problems withstanding a significant outflow of customer funds in ACRA’s base case and stress scenarios. It also complies with N26 and N28 ratios.
The satisfactory funding profile is determined by increased concentration on the ten largest groups of lenders. The associated risks of the resource base being dependent on corporate funds are offset by the predictable relations between the Bank and such lenders.
High degree of support from the state. As Gazprombank has carried out a function that is significant for the state’s economic policy since 2022, and given the preceding capital injections made by the state directly (not via the group), ACRA has applied the Methodology for Analyzing Rated Entities Associated with a State or a Group in order to assess the degree of support from the Russian Federation. At the same time, the Agency also takes into account the fact that Gazprombank’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 sustainability of the national financial system. Furthermore, the Bank of Russia categorizes Gazprombank as a systemically important credit institution (as of July 1, 2023 it held 5.7% of all deposits of private individuals). ACRA has expressed its opinion on the level of state support by adding four notches to the Bank’s standalone creditworthiness assessment (SCA).
KEY ASSUMPTIONS
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Maintaining strong competitive positions in key business segments.
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Maintaining the net interest margin within 2.5–3%.
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Maintaining Tier 1 and/or N20.2 ratio above 8% within the 12 to 18-month horizon.
POTENTIAL OUTLOOK OR RATING CHANGE FACTORS
The Stable outlook assumes that the rating will highly likely stay unchanged within the 12 to 18-month horizon.
A positive rating action may be prompted by:
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Higher capital adequacy;
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Improved risk profile factors (significant reduction of the concentration of the loan portfolio on the ten largest groups of borrowers, and the volume of specialized lending and direct investment).
A negative rating action may be prompted by:
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Further decline of core capital adequacy caused by advanced growth of at-risk assets or significant losses (increased cost of risk);
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Declining ability to internally generate capital;
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Deteriorating quality of the loan portfolio as regards non-performing loans;
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Stronger trend towards higher concentration on the top ten borrowers;
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Stronger trend towards increased lending to associates;
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The Bank ceasing to perform functions that are significant for the state’s economic policy.
rating components
SCA: а.
Support: the final rating has been set at four notches higher than then SCA as per the Methodology for Analyzing Rated Entities Associated with a State or a Group.
issue ratings
Rationale. The issues listed below are senior unsecured debt instruments of Gazprombank. 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 Gazprombank, i.e. AA+(RU).
Bank GPB (JSC), certified exchange-traded interest-bearing bearer bond, series BO-10 (RU000A0JUV08), maturity date: September 26, 2024, issue volume: RUB 10 bln — AA+(RU).
Bank GPB (JSC), certified exchange-traded interest-bearing bearer bond, series BO-09 (RU000A0JUQ39), maturity date: June 27, 2024, issue volume: RUB 10 bln — AA+(RU).
Bank GPB (JSC), certified exchange-traded interest-bearing bearer bond, series BO-08 (RU000A0JUMH3), maturity date: May 23, 2024, issue volume: RUB 10 bln — AA+(RU).
Bank GPB (JSC), certified exchange-traded interest-bearing bearer bond, series BO-16 (RU000A0JXP45), maturity date: April 18, 2024, issue volume: RUB 10 bln — AA+(RU).
Bank GPB (JSC), certified exchange-traded interest-bearing bearer bond, series BO-17 (RU000A0ZYEE5), maturity date: October 31, 2024, issue volume: RUB 10 bln — AA+(RU).
Bank GPB (JSC), certified exchange-traded interest-bearing bearer bond, series 001Р-02Р (RU000A0ZZUL3), maturity date: November 20, 2023, issue volume: RUB 10 bln — AA+(RU).
Bank GPB (JSC), certified exchange-traded interest-bearing bearer bond, series 001Р-06Р (RU000A1003R8), maturity date: February 14, 2024, issue volume: RUB 5 bln — АА+(RU).
Bank GPB (JSC), certified exchange-traded interest-bearing bearer bond, series 001Р-11Р (RU000A100HH4), maturity date: July 1, 2024, issue volume: RUB 10 bln — АА+(RU).
Bank GPB (JSC), certified exchange-traded interest-bearing bearer bond, series 001Р-12Р (RU000A100JB3), maturity date: January 5, 2025, issue volume: RUB 5 bln — АА+(RU).
Bank GPB (JSC), certified exchange-traded interest-bearing bearer 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-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), uncertified exchange-traded interest-bearing bearer bond, series 001Р-19Р (RU000A102GJ8), maturity date: December 11, 2030, issue volume: RUB 15 bln — AA+(RU).
Bank GPB (JSC), uncertified exchange-traded interest-bearing bearer bond, series 001Р-20Р (RU000A102LU5), maturity date: December 28, 2030, issue volume: RUB 2 bln — АА+(RU).
Bank GPB (JSC), uncertificated exchange-traded interest bearing bonds, series 001P-21P (RU000A104B46), maturity date: December 27, 2031, issue volume: RUB 30 bln — AA+(RU).
Bank GPB (JSC), uncertified exchange-traded interest-bearing bearer bond, series 001Р-22Р (RU000A105GW4), maturity date: November 24, 2032, issue volume: RUB 20 bln — АА+(RU).
Bank GPB (JSC), uncertificated exchange-traded interest bearing bonds, series 001P-26P (RU000A1064G3), maturity date: April 18, 2033, issue volume: RUB 10.4 bln — AA+(RU).
Rationale. The issues listed below are subordinated debt of Gazprombank with respect to senior unsecured creditors. According to ACRA’s methodology, the credit ratings of the bond issues, which are Tier 2 capital instruments, are three notches below Gazprombank’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).
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 59.4 mln — А+(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 260.25 mln — А+(RU).
Regulatory disclosure
The credit rating of Bank GPB (JSC) and the 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, Methodology for Analyzing Rated Entities Associated with a State or a Group, 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 Financial Instruments on the National Scale for the Russian Federation was also applied to assign the credit ratings to the above issues.
The credit rating of Bank GPB (JSC) was published by ACRA for the first time on November 24, 2016. The credit ratings of the bond issues ISIN RU000A0JUV08, RU000A0JUQ39, RU000A0JUMH3 were published by ACRA for the first time on December 28, 2017; ISIN RU000A0JXP45 — on April 24, 2017; ISIN RU000A0ZYEE5 — on October 30, 2017; ISIN RU000A0ZZUL3 — on November 19, 2018; ISIN RU000A1003R8 — on February 14, 2019; ISIN RU000A100HH4 — on July 1, 2019; ISIN RU000A100JB3 — on July 5, 2019; ISIN RU000A101350 — on November 21, 2019; ISIN RU000A101Z74 — on July 30, 2020; ISIN RU000A101ER8 — on September 29, 2020; ISIN RU000A102DB2 on November 20, 2020; ISIN RU000A102GJ8 — on December 11, 2020; ISIN RU000A102LU5 — on December 28, 2020; ISIN RU000A104B46 — on December 27, 2021; ISIN RU000A101EQ0 and RU000A103K38 — on January 27, 2022; ISIN RU000A105GW4 — on November 24, 2022, ISIN RU000A1064G3 — on April 20, 2023. 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 data provided by Bank GPB (JSC), information from publicly available sources, and ACRA’s own databases. The rating analysis was performed using the consolidated IFRS financial statements of Gazprombank 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.
In assigning the credit ratings, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided additional services to Bank GPB (JSC). No conflicts of interest were discovered in the course of credit rating assignment.
