Fitch affirms Raiffeisenbank’s rating at ‘BBB’, revises outlook to Stable

Fitch Ratings has affirmed Raiffeisenbank’s Long-Term Issuer Default Ratings (IDRs) at 'BBB' and has revised outlook to Stable from Negative.

According to Fitch, the outlook revision reflects reduced pressure on Raiffeisenbank’s credit profile from the pandemic and lower oil prices. Pre-impairment profitability has remained robust, which together with strong capitalisation, supports the bank’s loss absorption capacity and in Fitch’s view would be sufficient to provide for further credit losses even in the event of a longer and more severe downturn than currently anticipated. Asset-quality erosion has also been limited to date, as stated the agency.

Raiffeisenbank has strong Viability Rating at «bbb»; bank continues to capture its robust business model, conservative management, low risk appetite and strong financial profile. The share of impaired loans (Stage 3 under IFRS 9) remained at low level of 3.1% at end-2Q20, agency mentioned.

Raiffeisenbank’s capitalisation is strong, with the Basel 3 Common Equity Tier 1 (CET1) capital ratio at 25% at end-1H20 and regulatory Core Tier 1 ratio was 12.5% and 4.5pp higher than the minimum requirement, including fully-loaded buffers. Fitch expects that Raiffeisenbank’s capitalisation will remain strong in the current environment, as impairment losses will be fully absorbed through the bank’s earnings.

Customer accounts made up 91% of total liabilities at end-1H20, half of which comprised current accounts of retail customers. As a result, the cost of funding at Raiffeisenbank is one of the lowest in Russia at 2%, Fitch concluded.