The credit rating of JSC CB Solidarnost (hereinafter, the Bank) has been downgraded due to the lowering of the capital adequacy assessment to satisfactory amid a continued moderately low business profile assessment, critical risk profile assessment, and an adequate funding and liquidity position.
Registered in Samara, the Bank is among the 80 largest credit institutions in Russia by size of assets. The Bank’s priority business lines include corporate lending out of retail and corporate funds, as well as providing support to client payments, and issuing bank guarantees.
Key assessment factors
The limited business profile assessment (bb) stems from the Bank’s positions in the banking sector, as well as medium diversification of operating income. The Bank’s activities are subject to a financial rehabilitation plan (FRP), according to which the Bank has to create reserves for a range of its assets during the FRP’s effective period. In addition to providing a common range of financial services in the Russian market, the Bank’s strategy is focused on servicing cash flows and goods turnover between Russia, China, and Southeast Asian countries, as well as on servicing immigrant workers. The quality of corporate governance generally corresponds to the Bank’s business scale and development strategy.
The worsening of the capital adequacy assessment to satisfactory takes into account ACRA’s more conservative assessment of the Bank’s ability to generate capital due to the losses it recorded in 2024 (as per IFRS reporting). The latter is due to the creation of additional reserves for possible losses on loans against the backdrop of an increase in the volume of non-performing loans on the balance sheet and a reduction in net interest income and income from transaction business and foreign currency transactions. Taking into account the signifcant volume of non-performing assets that put pressure on the amount of received interest income, as well as due to the planned payment of dividends this year, ACRA expects that the downward trend in capital generation will continue.
The Agency notes a decline in the absolute size of equity in 2024 when calculated according to IFRS. The volume of equity under RAS was supported by the reclassification of the Bank’s investments in the securities portfolio into the category of those accounted for at amortized cost. The Bank continues to fulfil regulatory ratios with a considerable margin (N1.2 was 20.4% as of April 1, 2025). The IFRS capital adequacy ratio calculated by the Bank, which takes into account the entire amount of reserves for assets as required by the FRP had declined by approximately 3 pps as of January 1, 2025 vs. January 1, 2024 due to the creation of reserves for possible impairment. CTI calculated for the last three years was largely unchanged. At the same time, in 2024 the value of this indicator worsened against the backdrop of a decrease in net income received. The Bank’s NIM also declined slightly due to lower interest income. According to ACRA’s stress tests, the Bank is able to sustain an increase in the cost of credit risk of over 500 bps and maintain its capital metrics within their regulatory ranges.
Critical risk profile assessment. As of January 1, 2025, the Bank’s loan portfolio quality was still assessed as weak. The Agency notes an increase in the volume and share of Stage 3 and potential non-performing loans in the portfolio cleared of loans issued before the launch of the FRP or received as a result of the acquisition of Bank JSC MMA. Moreover, the Bank’s concentration on the 10 largest groups of borrowers is still high. Another negative rating factor is a significant volume of non-core assets (investment property, private equity, etc.) on the Bank’s balance sheet, the share of which in common equity has remained largely unchanged over the past year.
Adequate funding and liquidity position. The short-term and long-term liquidity shortage indicators remain strong and adequate, respectively, without changing significantly compared to the previous year. ACRA positively assesses the significant share of cash and liquid securities in the Bank’s assets. The N2 ratio was 113.6% as of April 1, 2025, while the average ratio over the past 12 months was around 90%. The N3 ratio was 103.2% as of April 1, 2025.
The degree of concentration on funding sources, with retail funds being the main funding source, was practically unchanged year-on-year as of January 1, 2025. The share of the largest group of lenders (depositors) in the Bank’s liabilities is low, while the share of the 10 largest groups of lenders is moderate.
Key assumptions
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The Bank’s performance indicators in line with the current FRP;
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N1.2 ratio remaining above 9% in the next 12–18 months.
Potential outlook or rating change factors
The Stable outlook assumes that the rating will highly likely stay unchanged within the 12–18-month horizon.
A positive rating action may be prompted by:
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Stronger capital generation capacity due to higher operational profitability, along with no deterioration of operational efficiency and sustainably high capital adequacy metrics;
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Significant improvement of the Bank’s market position;
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Sustainably lower concentration of the loan portfolio on the 10 largest groups of borrowers, and a considerably lower share of non-performing and potential non-performing loans;
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Lower volume of non-core assets on the balance sheet.
A negative rating action may be prompted by:
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Higher share of retail funds in liabilities;
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Deterioration of the liquidity position;
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Weaker operational efficiency;
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Considerable worsening of capital adequacy metrics.
Rating components
Standalone creditworthiness assessment (SCA): b+.
Adjustments: none.
Support: none.
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 Assigning Credit Ratings 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 credit rating of JSC CB Solidarnost was published by ACRA for the first time on May 22, 2019. 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 JSC CB Solidarnost, information from publicly available sources, and ACRA’s own databases. The rating analysis was performed using the IFRS financial statements of JSC CB Solidarnost and financial statements of JSC CB Solidarnost drawn up in compliance with the requirements of the Bank of Russia. The credit rating is solicited and JSC CB Solidarnost 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 additional services to JSC CB Solidarnost. No conflicts of interest were discovered in the course of credit rating assignment.
