Uzbekistan, Tashkent, May 4 / Trend D.Azizov /
Standard & Poor's Ratings Services assigned its 'B+' long-term and 'B' short-term counterparty credit ratings to Uzbekistan-based JSCM Ipoteka Bank, the agency's report said on Friday. The outlook is stable.
"The ratings on Ipoteka Bank reflect our view of the bank's 'adequate' business position, 'adequate' capital and earnings, 'moderate' risk position, 'average' funding, and 'adequate' liquidity," the report said.
S&P experts consider Ipoteka Bank's role 'important' in the domestic economy given its public policy role to finance residential mortgages in urban areas.
"Its 'very strong' link with the sovereign reflects the bank's 60 percent direct and indirect ownership by the state," the agency noted.
Ipoteka Bank's business position is defined as 'adequate,' owing to its sizable market share, wide branch network, and relatively good business diversity.
According to the agency, at year-end 2011, 85 percent of the bank's lending portfolio was in corporate loans, whereas mortgage loans only accounted for 11.5 percent, which reflects the lack of long-term funding and good quality borrowers.
Ipoteka Bank's capital and earnings are also assessed by S&P as 'adequate' which is a positive rating factor for a bank that has a 'b+' anchor.
The bank's asset quality indicators have steadily improved since 2009. For example, the ratio of individually impaired loans to total loans decreased to 3.3 percent at year-end 2011 from 7.3 percent at year-end 2009, which is close to the industry average. Loan loss provisions fully covered impaired loans and accounted for 4.2 percent of the total loan portfolio as of Dec. 31, 2011, the agency noted.
S&P considers Ipoteka Bank's funding to be 'average' and its liquidity position 'adequate'. The bank's funding base is dominated by on-demand customer deposits, which accounted for 57.8 percent of total liabilities. Therefore, the bank maintains a significant liquidity cushion and has cash and cash equivalents that account for almost 30 percent of total assets at year-end 2011. The deposit base is relatively well diversified: the top-20 depositors made up 18 percent of the total deposit base.
The stable outlook reflects S&P expectation that the bank's business and financial profiles will remain broadly unchanged over the outlook horizon of one year.
A negative rating action could occur if asset growth is higher than planned or if there were an unexpected material fall in earnings. S&P would also lower the ratings on the bank if assessment of economic and industry risk, including the sovereign's creditworthiness, were to deteriorate.
In 2012 Ipoteka bank increased its assets by 43.1 percent - up to 1.504 trillion soums, loan portfolio grew by 63.4 percent - up to 907.808 billion soums, liabilities by 44.9 percent - up to 1.366 trillion soums, equity banking capital increased by 26.9 percent to 137.66 billion soums. In particular, authorized capital increased by 47.3 percent and was at the beginning of 2012 91.181 billion soums at market value, retained earnings from previous years decreased by 18.5 percent to 9.933 billion soums.
Net profit of Ipoteka-bank grew by 59.8 percent in 2011, compared to the same period in 2010, and amounted to 25.636 billion soums. As reported, in late April Moody's downgraded long-term local currency deposit rating of Ipoteka Bank to B2 from B1.
The official exchange rate is 1,859.07 soums to $ 1on May 4.