CJSC AK&M Rating Agency affirmed the 'A' credit rating (stable outlook) assigned to JSC Izhcombank (license no. 646) on the national scale.
The 'A' rating indicates that JSC Izhcombank qualifies as a highly reliable borrower. Risk of a delay in meeting liabilities is relatively low, restructuring risk for a loan / part of a loan is minimal.
We regard the acceptable level of key balance sheet ratios, structural improvements in active operations, fairly strong loon book, and low concentration of liabilities as essential positive rating drivers for JSC Izhcombank.
At the end of 9 months 2013, assets and equity capital of the credit institution amounted to RUB 6,872 million and RUB 883 million, respectively, growing by 8.9% and 15.5% year-on-year, respectively, which, however, is below the average performance of Russia's banking sector (18.5% and 20.4%, respectively). This is partly attributable to a high base effect: in 2010-2012, JSC Izhcombank's key balance sheet ratios grew faster than in Russia's banking system on average. As a result, the Bank's assets increased by 69%, equity capital by 59% since the start of 2010, against 61% and 43% on average, respectively, in the banking sector for the same period.
Despite a slowdown in the growth of active operations, their structure has improved. The Bank reduced investment in securities and further expanded its loan portfolio (by ca. 20% compared with the start of the year, with stronger performance in the segments of retail (+13%), and corporate lending (+26%).
JSC Izhcombank maintains high quality of loan assets, which contributes moderately to its rating. In particular, the share of problem and non-performing loans as of October 1, 2013 was 4.36%, below the average percentage in Russia's banking sector (6.4%).
Another argument in favor of JSC Izhcombank's rating is that its liabilities are well spread across the groups of investors, the largest of them accounting for 2.87%, the ten largest investors (groups of investors) for 13.4% of the Bank's total liabilities as of October 1, 2013.
At the same time, the apparently lower operating performance of JSC Izhcombank is an essential risk factor for its rating. In particular, the Bank's 9-month balance sheet profit was a mere RUB 44.0 million against RUB 118.7 million for the same accounting period in 2012. Furthermore, the Bank posted a RUB 11 million balance sheet loss in the third quarter. As a natural result, the Bank's equity capital dropped by 1.43 p.p., These negative changes were triggered by an upsurge of operating expenses coupled with higher loan loss provisions the Bank had to make facing a weaker loan portfolio, and an increase in interest and commission earnings was not enough to offset this impairment.
Full Bank name: Joint Stock Company Izhcombank.
JSC Izhcombank established on the basis of the Udmurt Republican Department of Zhilsotsbank of the USSR has been active in the market of banking services since 1990. The bank comprises 2 operational offices, 18 satellite offices, one representative office and 5 stand-alone cash desks. One of the Bank's operational offices and one of its stand-alone cash desks are located outside of the Udmurt Republic, namely, in Chaykovsky city, Perm Krai.
JSC Izhcombank is licensed by the Central Bank of Russia to provide banking services and to accept money deposits from individuals (lic. no. 646 as of October 5, 2005). In December 2004, the Banking Supervision Committee of the Central Bank permitted the Bank to join the Deposit Insurance System (DIS). The Bank's auditor is CJSC Yekaterinburg Audit Center (license of Russia's Ministry of Finance no. E 000455 as of June 25, 2012).
JSC Izhcombank focuses on providing all types of banking products and services involving Russian rubles and foreign currencies.
At the end of 9 months 2013, the Bank ranked 329th among Russian banks in the amount of assets, 500th in net profit, 393rd in equity capital.
This press release is based on the statement of assigning a credit rating to JSC Izhcombank.
The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Bank's credit standing and shall not be considered as advice on the purchase and sale of securities or the provision of loan facilities to the Bank.
AK&M Rating Agency will not incur any responsibility for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.
AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993.
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