Tashkent, Uzbekistan, Dec. 23
By Demir Azizov - Trend:
Standard & Poor's Ratings Services said today it affirmed its 'CCC/C' long- and short-term counterparty credit ratings on Uzbekistan-based Ravnaq-bank. The outlook remains positive, S&P said today.
"The affirmation balances our view of Ravnaq-bank's capital growth lagging behind asset growth with improvements in its business standing, including more stable and diverse earnings," S&P said.
Ravnaq-bank demonstrated rapid asset growth in 2013 (110%).
The agency believes this elevated growth will continue over the next 12-18 months, putting pressure on the bank's capitalization and lowering its risk-adjusted capital (RAC) ratio before adjustments for concentrations and diversification to 8%-9% from 29.5% at the end of 2012.
S&P forecast takes into account rapid balance sheet expansion by a further 115% in 2014 and 45% in 2015.
The agency expects profitability levels to remain fairly low, partially driven by the bank's focus on market share, with return on equity not exceeding 5% over the next two years.
At the same time, S&P believes that the bank has proved its strategy to be successful by achieving strong growth despite its failure to obtain its foreign exchange license and open new branches in 2013.
In S&P view, however, Ravnaq-bank is likely to keep expanding in 2014 following the opening of a new branch in Tashkent.
The agency expects gradual improvement in earnings quality and diversity in 2014 to potentially give greater support to the bank's creditworthiness.
S&P might consider raising the rating if the bank managed to improve its funding profile by boosting ties with its clientele, thereby alleviating our concerns on concentration risks in the deposit base.
The agency might consider a revision of the outlook to stable if the bank failed to obtain a foreign currency license in 2014, contrary to its expectations.
S&P could consider a negative rating action if the bank failed to realize its strategy of expanding its geographic coverage.
Ravnaq-bank was founded in Tashkent in 2001. It is among small private banks in the country. The bank has nine branches in Tashkent.
According to the bank, its assets decreased by 3.4 percent - up to 20.241 billion soums in 2012. The loan portfolio decreased three-fold - up to 2.987 billion soums. The equity capital increased two-fold - up to 12.796 billion soums.
The official exchange rate is - 2.199.93 soums/$1 on Dec. 23.