The credit rating of RosDorBank (hereinafter, RDB, or the Bank) is determined by the limited business profile assessment, adequate capital adequacy assessment, critical risk profile, and adequate funding and liquidity position.
RDB is a small (in terms of assets) Moscow-based bank that focuses on servicing corporate clients in the SME segment.
KEY ASSESSMENT FACTORS
The limited business profile assessment (bb) reflects the Bank’s limited share in the Russian banking system, coupled with relatively poorly diversified operating income. The assessment of RDB’s corporate governance system is comparable with that of other regional banks.
RDB’s strategy focuses on SMEs, including those operating in the construction industry, where the Bank boasts extensive experience and deep expertise in various construction industry segments (including road construction), the transportation sector, and related machine-building industry segments. The Bank also intends to develop leasing, factoring, and B2B2B products. In addition to the above competencies, RDB’s development model involves active use of business relationships and connections of its multiple shareholders, which greatly contributes to client loyalty.
Adequate assessment of capital adequacy. Regulatory ratios are satisfied with a margin (the N1.2 ratio was 10.49% as of December 1, 2023), while the Bank regularly pays dividends and periodically receives capital injections from owners. The averaged capital generation ratio (ACGR) for 2018–2022 exceeded 50 bps.
The Agency notes that average CTI (cost-to-income) ratio has declined, while the NIM (net interest margin) is comparable to the NIM of peer banks.
Critical risk profile assessment. ACRA notes that the share of non-performing and potentially non-performing loans has declined, while the coverage of IFRS 9 Stage 3 loans is as low as about 50%.
The risk profile is further pressured by the volume of loans granted to the construction and real estate sector, which, in the Agency’s opinion, is sensitive to external shocks and has structurally high credit risks.
The share of the ten largest groups of borrowers has slightly increased and now it accounts for about a third of the Bank’s loan portfolio, which has a moderate level of concentration compared to Russian peers.
The quality of the portfolio of securities and interbank lending is acceptable.
Adequate funding and liquidity assessment. The Bank has a short-term liquidity surplus in both ACRA’s base case and stress scenarios. The long-term liquidity shortage ratio is assessed as adequate. The Agency notes that the share of the ten largest groups of lenders in the Bank’s liabilities has grown since the last rating action date; however, ACRA takes into account the volatility of this indicator and the presence of short-term interbank loans and repurchase transactions among such funding sources.
key assumptions
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Maintaining the current business model within the next 12 months.
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Maintaining the N1.2 ratio above 9% within the next 12 month thanks to, among other things, capital inflows from the Bank’s shareholders.
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Maintaining the five-year ACGR above 50 bps.
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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Significant improvement of the risk profile, including a decline of the share of non-performing and potentially non-performing loans and lower volumes of high-risk loans;
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Growing N1.2 CAR.
A negative rating action may be prompted by:
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Sustainable decline and stabilization of N1.2 at below 9% over the 12-month horizon;
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Actual or expected decline of the five-year ACGR below 50 bps;
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Sustainable increase in the concentration on the top ten groups of lenders or the largest group of lenders;
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Actual or expected three-year average cost-to-income ratio exceeding 75%.
rating components
Standalone creditworthiness assessment (SCA): bb-.
Adjustments: none.
Support: none.
issue ratings
RosDorBank, series 02 (RU000A0ZZZ25), maturity date: December 12, 2024, issue volume: RUB 300 mln — В-(RU).
Rationale. The credit rating of the series 02 bond issue (ISIN RU000A0ZZZ25) has been affirmed at B-(RU) based on the affirmation of the issuer’s credit rating. The issue is a Tier 2 capital instrument, which implies a significant level of subordination with respect to senior unsecured creditors and determines its rating three notches below the credit rating of RDB.
regulatory disclosure
The credit ratings have been assigned to RosDorBank and the bond issue (ISIN RU000A0ZZZ25) of RosDorBank 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 Financial Instruments under the National Scale for the Russian Federation was also applied to assign the credit rating to the above issue.
The credit ratings of RosDorBank and the bond issue (ISIN RU000A0ZZZ25) of RosDorBank were published by ACRA for the first time on April 10, 2018 and December 21, 2018, respectively. The credit rating of RosDorBank and its outlook and the credit rating of the bond issue (ISIN RU000A0ZZZ25) of RosDorBank 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 RosDorBank, information from publicly available sources, and ACRA’s own databases. The rating analysis was performed using the consolidated IFRS financial statements of RosDorBank and the financial statements of RosDorBank drawn up in compliance with Bank of Russia Ordinance No. 6406-U dated April 10, 2023. The credit ratings are solicited and RosDorBank 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 no additional services to RosDorBank. No conflicts of interest were discovered in the course of credit rating assignment.
