Credit expert
In addition, a high grade is given to the bank's ability to attract more liquidity using its high-quality securities portfolio.
In terms of funding and liquidity, the agency's analysts highlight a stable deposit base and a comfortable liquidity cushion. In 2021, MKB strengthened its capital position with a RUB 23 bln SPO in May and USD 350 mln perpetual subordinated Eurobonds in September. MKB has kept a comfortable level of ROE: in 1H2021 it was 11.2% (annualised). The agency notes a positive trend in net interest and fee income, as well as effective management of the bank's income and expenses. In the first half of 2021, MKB's net income rose to RUB 13.6 bln compared to RUB 9.1 bln for the same period of 2020. The analysts expect moderate growth in corporate lending and a bigger share of retail business, mostly due to mortgage lending programmes. The share of problem loans (classified as Stage 3 under IFRS 9 and credit impaired at initial recognition) shrank to 4%, causing the cost of risk to fall threefold in the first half of 2021 to 0.6% (annualised). The analysts note that MKB's business model proved effective in the face of market turbulence, as evidenced by improved asset quality. The analysts specifically noted that the bank's capital position got stronger due to both capital generation and an SPO, which increased its loss absorption buffer, and that the principles of sustainable development are integrated deeply into its corporate governance, which testifies to its high standards. MKB successfully tackled the new challenges and adapted to the changed operating environment.
The agency underlines that asset quality and profitability was maintained in 2020-1H2021 despite the economic downturn.
CREDIT EXPERT UPGRADE
The upgrade reflects the bank's successful passage through the adverse market conditions as evidenced by a higher evaluation of its corporate governance and strategy. On 8 October 2021, Expert RA has upgraded the credit rating of Credit Bank of Moscow (MKB) to ruA+, "stable" outlook.
Expert RA upgrades MKB's credit rating to ruA+