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Moody’s Affirms Center-invest Bank’s Ba3 Rating

On 18 December 2017 Moody’s Investors Service affirmed Center-invest Bank’s Ba3 rating for long-term local and foreign-currency deposits, outlook stable. Center-invest Bank is the only bank in southern Russia to have held an international rating since 2006.

The Credit Opinion was based on Center-invest Bank’s interim financial statements for Q3 2017, prepared under IFRS.

Moody’s notes that the Baseline Credit Assessment (BCA) of Ba3 reflects the resilience of Center-invest Bank’s solvency metrics (asset quality, profitability and capital adequacy) to the volatile operating conditions in Russia, and their potential for improvement as Russia’s economy emerges from recession; its balanced funding mix and stable liquidity position; and its diversified business profile.

The ratings agency highlights that Center-invest Bank has reduced corporate lending as a proportion of total lending, in favour of mortgage and retail lending. The bank’s loan portfolio structure follows the structure of southern Russia’s economy: retail and SME lending account for 57% and 34% of lending, respectively.

Moody’s recognises that Center-invest Bank’s business is concentrated in the Rostov region and neighbouring southern regions (Volgograd region, Kuban and Stavropol), which are experiencing economic growth, despite the downturn in the Russian economy overall: in almost all sectors in southern Russia, compared to the national average, output is increasing more quickly, while manufacturers’ prices are rising more slowly. Center-invest Bank continually promotes this trajectory for economic recovery and restructuring, and it follows it itself: the bank’s cost-to-income ratio for the first nine months of 2017 was 47.2%.

Moody’s also notes that Center-invest Bank’s good cost management allows it to generate respectable profits. The bank’s IFRS profits for the first nine months of 2017 were RUB0.9bn.

Moody’s does not anticipate any negative events that could significantly affect Center-invest Bank’s financial metrics over the next 12-18 months.

For the official Credit Opinion please see: