Moody’s upgraded Raiffeisenbank local-currency deposit rating to Baa3 investment level

The international Rating Agency Moody’s upgraded Raiffeisenbank’s long-term local-currency deposit and senior unsecured debt ratings to Baa3 from Ba1 investment level, leaving the outlook stable. The long-term foreign-currency deposit rating was confirmed at Ba2 level. Counterparty risk assessment was upgraded from Baa3 to Baa2.

The decision of the Agency was primarily caused by the previous upgrade in the baseline credit assessment (BCA) of the parent bank Raiffeisen Bank International AG from ba1 to baa3. whereby, the long-term foreign-currency deposit rating is limited by the country long-term foreign-currency deposit rating in Russia (Ba2)
The experts of the Rating Agency also took into account the stable business model and stable indicators of creditworthiness of Raiffeisenbank during the credit cycle in comparison with peers in Russia and abroad. The Agency expects the bank to maintain high profitability, as well as a substantial supply of capital and liquidity over the horizon of 12–18 months.

The share of the bank bad loans, including impaired and overdue for 90 or more days, in 2017 decreased to 4.3% from 6.3% a year earlier. This is significantly lower than the level of bad debt in the Russian banking sector, which Moody’s estimates at the level of 12% in 2017. Coverage of bad loans with provisions at Raiffeisenbank remains high and amounts to 79%, as of the year-end of 2017.

Over the past year, the bank earned 29.1 billion rubles of net profit compared to 23.3 billion rubles a year earlier, which means an average return on assets of 3.7%. Profit growth was primarily achieved due to a threefold reduction in allowances for provisions.