The credit rating of International Bank for Economic Co-operation (hereinafter, IBEC or the Bank) is based on assessments of rating factors, including a satisfactory business profile, strong capital adequacy, weak risk profile assessment, and an adequate assessment of funding and liquidity. At the same time, the factor of support from the Bank’s shareholder countries does not influence IBEC’s final rating.
Headquartered in Moscow, IBEC is an international financial institution with a mandate to facilitate international trade, economic development, and collaboration among its member states and the rest of the world.
KEY ASSESSMENT FACTORS
The Bank’s business profile is assessed as satisfactory. As per its mandate, IBEC focuses on developing the economies and foreign trade links of its member states. Previously, the Bank’s business was mainly focused on counterparties from the European Union. The exit of EU countries from IBEC’s pool of shareholders resulted in the need to find new markets for the Bank. The Bank has approved a new strategy, which will enable it to continue carrying out the objectives as per its mandate.
Strong capital adequacy position. IBEC’s capital adequacy is high, which allows it to withstand the potential risks of a significant deterioration of asset quality. The capital adequacy indicator calculated as per the Methodology for Assigning Credit Ratings under the International Scale to International Financial Institutions amounted to 62% as of December 31, 2024. According to the Bank’s plans, the capital adequacy is to be maintained high in the medium term. Payments to the EU countries that exited the Bank are not expected to significantly impact IBEC’s capital adequacy metrics.
Given the large loss incurred by the Bank in 2022, average return on equity for 2022–2024 is
-6.5%. At the same time, ACRA assumes that this loss, which was related to sanctions and other restrictions imposed on Russia, is a one-off event and will not impact the Bank’s ability to deliver profits in the future. Particularly, the Bank’s net profit was positive in 2024. Therefore, the Agency has not applied a negative adjustment to the assessment of IBEC’s capital position.
The Bank’s risk profile assessment is weak. The average quality of assets remains quite high, while the share of NPL90+ is low. The high territorial concentration of IBEC’s assets has a serious negative impact on its risk profile assessment. The withdrawal of the EU countries and certain difficulties in working with European counterparties forced the Bank to transfer a significant portion of assets to the jurisdictions of other shareholder countries, whose shares increased as a result. As of December 31, 2024, the maximum share of IBEC’s assets in a single country exceeded 30%, which serves as grounds for the weak assessment of the Bank’s risk profile. In addition, receivables from the ten largest groups of related borrowers (counterparties, issuers) to the total capital of IBEC exceed 100%. Further growth of this metric may lead to a lower risk profile assessment.
The Bank’s funding and liquidity position remains adequate. The overall diversification of liabilities remains moderate, and funds raised from other banks amounted to less than 20% of IBEC’s total liabilities as of December 31, 2024. Highly liquid assets significantly exceeded short-term liabilities as of December 31, 2024, while the share of these assets on the balance sheet amounted to more than 20%.
The assessment of support from shareholder countries does not influence the Bank’s credit rating, which is determined based on its standalone creditworthiness assessment (SCA). IBEC’s credit rating is AAA(RU), outlook Stable, under the national scale for the Russian Federation as per the Methodology for Mapping Credit Ratings Assigned under ACRA’s International Scale to Credit Ratings Assigned under ACRA’s National Scales.
KEY ASSUMPTIONS
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Maintaining the Bank’s core functions;
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Maintaining the capital adequacy ratio above 25%;
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Maintaining asset diversification indicators at the current level;
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Profitability of operations;
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Maintaining an adequate liquidity and funding position.
POTENTIAL OUTLOOK OR RATING CHANGE FACTORS UNDER THE INTERNATIONAL SCALE
The Stable outlook assumes that the credit rating will highly likely stay unchanged within the 12 to 18-month horizon.
A positive rating action may be prompted by:
- Significantly lower concentration of the Bank’s assets by countries and groups of borrowers (counterparties, issuers).
A negative rating action may be prompted by:
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Lower assessment of capital adequacy that results in a stable decline of the Bank’s return on equity;
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Higher concentration by groups of borrowers (counterparties, issuers);
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Growth of impaired assets;
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Deterioration of funding and liquidity position.
POTENTIAL OUTLOOK OR RATING CHANGE FACTORS UNDER THE NATIONAL SCALE FOR THE RUSSIAN FEDERATION
The Stable outlook assumes that the rating will highly likely stay unchanged within the 12 to 18-month horizon.
A negative rating action may be prompted by:
- Significant downgrade of IBEC’s credit rating under the international scale.
RATING COMPONENTS UNDER THE INTERNATIONAL SCALE
SCA: a-.
Adjustments: none.
ISSUE RATINGS
Bonds of International Bank for Economic Co-operation, series 001P-02 (RU000A101RJ7), maturity date: June 3, 2030, issue volume: RUB 5 bln — AAA(RU).
Bonds of International Bank for Economic Co-operation, series 002P-03 (RU000A108Q03), maturity date: June 6, 2034, issue volume: RUB 5 bln — AAA(RU).
Rationale. The credit ratings of the bond issues are equivalent to that of IBEC. The bond issues represent senior unsecured debt of IBEC. 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 IBEC in terms of priority.
REGULATORY DISCLOSURE
The credit rating has been assigned to International Bank for Economic Co-operation under the international scale based on the Methodology for Assigning Credit Ratings under the International Scale to International Financial Institutions. The credit ratings have been assigned to International Bank for Economic Co-operation and the bond issues of International Bank for Economic Co-operation (RU000A101RJ7, RU000A108Q03) under the national scale for the Russian Federation based on the Methodology for Mapping Credit Ratings Assigned under ACRA’s International Scale to Credit Ratings Assigned under ACRA’s National Scales 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 ratings to the above issues.
The credit ratings of International Bank for Economic Co-operation under the international scale and the national scale for the Russian Federation were published by ACRA for the first time on May 18, 2020. The credit ratings assigned under the national scale for the Russian Federation to the bond issues of International Bank for Economic Co-operation (RU000A101RJ7, RU000A108Q03) were published by ACRA for the first time on June 15, 2020 and June 18, 2024, respectively. The credit ratings and their outlooks, as well as the credit ratings of the bond issues listed above, are expected to be revised within 182 days following the publication date of this press release as per the Calendar of sovereign credit rating revisions and publications.
The credit ratings were assigned based on data provided by International Bank for Economic Co-operation, information from publicly available sources, and ACRA’s own databases. The rating analysis was performed using the IFRS financial statements of International Bank for Economic Co-operation. The credit ratings are solicited and International Bank for Economic Co-operation 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 International Bank for Economic Co-operation. No conflicts of interest were discovered in the course of credit rating assignment.
