The credit rating of Joint Stock Company Commercial Bank «Lanta-Bank» (the Bank) has been upgraded following the upgrade of the capital adequacy assessment from satisfactory to adequate. The Agency has maintained the moderately low business profile assessment, critical profile assessment, and adequate funding and liquidity assessment. The credit rating also takes into account the likelihood of shareholder’s support, which is reflected in the addition of one notch to the standalone creditworthiness assessment (SCA).

Lanta-Bank is a Moscow-based bank whose regional network spans across four federal districts and includes the Republic of Sakha (Yakutia), the Khabarovsk Krai, and the Primorsky Krai. It is one of the leaders in the market of precious metals and bullion coins. The Bank’s priority business lines are services, including lending, to corporate customers, including SMEs, support to export/import transactions, and brokerage services.

KEY ASSESSMENT FACTORS

The Bank’s moderately low business profile assessment is based on the market positions held by the Bank and the low assessment of its strategy. The quality of corporate governance corresponds with the scale of the Bank’s operations, and its main beneficiaries are involved in managing the Bank. The diversification of operating income is assessed as quite high (the Herfindahl—Hirschman Index is 0.22), which is ensured mainly by a significant share of proceeds from precious metals transactions.

The capital adequacy assessment has been upgraded to adequate due to an improvement in the Bank’s margin of safety (as confirmed by ACRA’s stress test). This was facilitated by the capitalization of profits and the strong financial performance of the Bank over the past two years. According to the Agency’s calculations, the Bank can firmly withstand an increase in credit risk of over 500 bps. The 2019–2023 average capital generation ratio (ACGR) is in the range of adequate values, taking into account ACRA’s adjustments. The limiting factor for the assessment is still the operational efficiency of the Bank, which is negatively affected by the high share of operating income generated by items sensitive to market fluctuations.

The critical assessment of the Bank’s risk profile is mainly associated with the low quality of the loan portfolio where the share of non-performing and potentially non-performing loans is high. In addition, the substantial volume of non-core assets on the Bank’s balance sheet has a negative impact on the risk profile assessment. The quality of the risk management system is assessed as satisfactory.

The adequate funding and liquidity position is based on the sufficient volume of liquid and high-liquid assets. The calculation of the short-term liquidity shortage indicator shows that the Bank has a liquidity surplus in ACRA’s both base case and stress scenarios. The long-term liquidity shortage indicator remained strong as of end-2023. On the other hand, the factor assessment is constricted by the increased funding concentration on the largest group of lenders that includes parties related to the Bank, as well as on the ten largest groups of lenders. Historically, the resource base structure depends heavily on the funds of individuals and sole entrepreneurs.

ACRA has upgraded the SCA taking into account the likelihood of support from the shareholder. This adjustment takes into account the probability of extraordinary support being provided to the Bank by a company owned by the key shareholder. In accordance with the Methodology for Analyzing Rated Entities Associated with the State or a Group, the Bank’s credit rating has been increased by one notch relative to its SCA (b+).

key assumptions

  • The shareholder structure and operational control remaining unchanged.

  • Pursuing the current business model over 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:

  • Improvement of the Bank’s capital position and/or increased operational efficiency;

  • Significant improvement of asset quality.

A negative rating action may be prompted by:

  • Deterioration of the Bank’s liquidity and funding position;

  • The shareholder losing interest in supporting the Bank.

RATING COMPONENTS

SCA: b+.

Adjustments: none.

Support: SCA plus one notch.

issue ratings

No outstanding issues have been rated.

regulatory disclosure

The credit rating has 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 Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.

The credit rating of Joint Stock Company Commercial Bank «Lanta-Bank» was published by ACRA for the first time on May 19, 2020. The credit rating and its outlook are expected to be revised within one year following the publication date of this press release.

The credit rating was assigned based on data provided by Joint Stock Company Commercial Bank «Lanta-Bank», information from publicly available sources, and ACRA’s own databases. The rating analysis was performed using the IFRS financial statements of Joint Stock Company Commercial Bank «Lanta-Bank» and the financial statements of Joint Stock Company Commercial Bank «Lanta-Bank» drawn up in compliance with the Bank of Russia’s Ordinance No. 6406-U dated April 10, 2023. The credit rating is solicited, and Joint Stock Company Commercial Bank «Lanta-Bank» participated in its assignment.

In assigning the credit rating, 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 Joint Stock Company Commercial Bank «Lanta-Bank». No conflicts of interest were discovered in the course of credit rating assignment.

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