On 26 October the international rating agency Moody′s Investors Service affirmed Center-invest Bank’s Ba3 rating for long-term local currency debt and foreign currency deposits, outlook stable, and its Aa3.ru long-term national scale rating. Center-invest Bank, southern Russia’s leading bank, is the only bank in the region to have had an international rating for six years already.
Center-invest Bank’s long-term ratings were upgraded by Moody′s in August 2011. This was amid volatility on global markets and at a time when the ratings of the world’s leading economies were being cut.
Experts from Moody’s note that the current rating reflects Center-invest Bank’s strong market positions in Russia’s Southern Federal District. The bank’s broad base of retail and business customers, its extensive branch network, and the inclusion of international institutions and funds among its shareholders, all enable it to operate confidently in the local market. Center-invest Bank’s ratings have been upheld on the basis of its IFRS financial statements for 2011 and 1H 2012.
As at 01.10.2012, Center-invest Bank’s assets calculated under IFRS were RUR61.1bn; deposits totalled RUR41.7bn; the loan portfolio stood at RUR46bn, and profits at RUR0.79bn.
For Center-invest Bank, sustainable banking is not just about social and environmental responsibility. Sustainable banking is a business model based on long-term profitability in the interests of current and future generations, rather than on immediate, speculative gains.
In its most recent overview of the Russian banking sector, Moody’s Investors Service identifies the following main trends: decelerating economic growth; problems with bank asset quality and capital; and funding and liquidity difficulties.
Nonetheless, Moody’s analysts have shown that they approve of the sustainable banking business model being implemented by Center-invest Bank to encourage post-crisis modernization in southern Russia. By applying the latest knowledge and best international practice, Center-invest Bank has helped southern Russia’s best companies to enter new markets and compete in the new global economy.
President and Chairman of the Board of Directors of Center-invest Bank, Dr. Vasily Vysokov, notes, “We could not have expected a more optimistic outlook for the Russian banking system from the rating agency, but the slower pace of growth really will reduce demand for loans and money. The economy is currently making the transition to a new equilibrium point, from which companies will be able to more clearly identify their future strategies and look for new solutions in the new market realities”.
The agency forecasts GDP growth in Russia of 3.5% for both 2012 and 2013, which compares unfavourably to 4.3% in 2011. The agency links the slowdown with reduced demand for oil on the global markets. This is a good reason to wean the Russian economy off its oil dependency and to start modernizing industry and manufacturing.
Center-invest Bank’s asset quality and Tier 1 capital adequacy ratios are almost double the averages forecast for Russian banks by Moody’s. Moreover, the privatization of state-owned banks will not only reduce the risks to the public purse, but will also increase the need for market-based approaches in the banking sector.
Despite its negative tone, the forecast gives Russian banks a cue to develop business plans for 2013 that will allow them to lend with confidence even when economic growth is slowing. Banks should be encouraged to lend to customers who have not simply managed to survive the crisis, but who are taking meaningful steps to modernize their businesses and improve their standard of living.