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Moody's assigns B2/NP/E+/A3.ru ratings to NBD Bank (Russia)

April 14, 2008 | Cbonds

First-time ratings

New York, April 14, 2008 -- Moody's Investors Service today assigned the
following global scale ratings to NBD Bank: a bank financial strength rating
("BFSR") of E+ and long-term and short-term local and foreign currency
deposit ratings of B2/Not Prime. Concurrently, Moody's Interfax Rating
Agency assigned a long-term national scale rating of A3.ru to NBD Bank.
Moscow-based Moody's Interfax is majority-owned by Moody's, a leading global
rating agency. The outlook on the global scale ratings is stable, while the
national scale rating carries no specific outlook.

According to Moody's and Moody's Interfax ("Moody's"), the B2/Not Prime/E+
global scale ratings reflect NBD Bank's global default and loss expectation,
while the A3.ru national scale rating reflects the standing of the bank's
credit quality relative to that of its domestic peers.

According to Moody's, NBD Bank's ratings reflect its entrenched SME banking
franchise in Nizhniy Novgorod region, its established relationships with
international financial institutions and the bank's overall sound financial
indicators at present. At the same time, the ratings are constrained by the
bank's small size, which results in a concentrated loan portfolio within its
home region, and its growing reliance on market sources of funding, which
raises concerns with regard to refinancing risks. The growing competition in
the bank's targeted segment of SME lending and the likely decreasing trend
in its capitalisation going forward also exert downward pressure on the
bank's ratings.

Moody's notes that NBD Bank would be unlikely to receive support from the
Russian government in case of distress. The scope and timeliness of the
support from the bank's shareholders also remain uncertain. Therefore, NBD
Bank's deposit ratings do not incorporate any probability of external
support and are based solely on its E+ BFSR (which maps to a baseline credit
assessment of B2).

Moody's notes that an upgrade of NBD Bank's deposit ratings is possible if
it records considerable growth, resulting in a decreasing level of credit
risk concentration and increased geographical business diversification, and
maintains a sound financial profile. If the bank proves its ability to
withstand a growing level of competition from the largest banks and defend
its market share, this could also exert upward pressure on the deposit
ratings.

A downgrade of NBD Bank's current ratings is possible if the bank proves
unable to withstand the growing level of competition, resulting in a
weakening of its financial profile and, particularly, a material decrease in
its asset quality.

Domiciled in Nizhniy Novgorod, NBD Bank focuses its activity on the
development of SME lending within its home territory as well as within
neighbouring regions. NBD Bank is one of the largest local banks in Nizhniy
Novgorod region by total assets and shareholders' equity with 18 offices.

As at 31 December 2007, NBD Bank reported unaudited, unconsolidated IFRS
total assets of US$394 million (YE2006: US$259 million), shareholders'
equity of US$59 million (YE2006: US$47 million) and net income of US$7.7
million (YE2006: US$11.3 million).

Company: NBD-Bank

Full company nameNBD-Bank, Joint-Stock Company
Country of riskRussia
Country of registrationRussia
IndustryBanks

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