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06.04.2017

Moody’s Upgrades Center-invest Bank’s Ratings

On 3 April Moody’s Investors Service upgraded Center-invest Bank’s long-term local- and foreign-currency deposit ratings to Ba3 from B1. The outlook on these ratings remains stable1.

At the same time, Moody’s upgraded the bank’s baseline credit assessment (BCA) to ba3 from b1, affirmed the stable outlook for short-term local- and foreign-currency deposit ratings, upgraded its long-term Counterparty Risk Assessment (CR Assessment) to Ba2(cr) from Ba3(cr), and affirmed its long-term risk assessments.

The rating action was based on Center-invest Bank’s audited financial statements for 2016, prepared under International Financial Reporting Standards (https://www.centrinvest.ru/files/about/reports/fininternational/IFRS_208FZ_AUDIT_RPRT_2016.pdf).

Moody’s says its ratings upgrade reflects the resilience of Center-invest Bank’s solvency metrics to the challenging operating environment in Russia and its expectation that these metrics will show sustainable improvement after the 2014-2016 economic slowdown. The rating action also takes into account Center-invest Bank’s sustainable funding and conservative liquidity management.

Moody’s believes that the economy in Rostov-on-Don and adjacent regions in southern Russia is growing faster than elsewhere in Russia. Center-invest Bank operates in better performing sectors of the economy and follows a long-term business model. In 2016 the proportion of secured mortgage loans in the bank’s portfolio increased to 26% (+7%) of total loans, while loans to the more risky corporate sector (including SMEs) decreased to 46% (-6%). Center-invest Bank’s asset quality is more predictable than that of many other Russian banks, due to its more diversified SME loan portfolio.

Center-invest Bank’s return on assets increased to 1.1% in 2016 (+0.5%). Moody’s expects further improvement in the bank’s financial performance in 2017 thanks to its high interest margin and provisioning coverage. The bank’s Tier 1 capital adequacy is 13.7%.

Center-invest Bank has strong funding and liquidity profiles and a good reputation among depositors. The bank uses retail deposits for retail lending. Its diversified loan and deposit portfolios provide a stable liquidity cushion of 16% of total assets, which comprises cash and cash equivalents only.

Moody’s does not anticipate any negative rating action for Center-invest Bank over the next 12-18 months.

For the official Credit Opinion please see the Moody’s website: https://www.moodys.com/research/Center-Invest-Bank-Post-rating-committee-update-Credit-Opinion--PBC_1065793

1The text of the Rating Action is available at: https://www.moodys.com/research/Moodys-upgrades-Center-Invest-Banks-deposit-ratings-to-Ba3-from--PR_364448?lang=ru&cy=easterneur