CIS Credit Monitor: MDM Bank

MDM Bank (B/Ba2/B+): consolidated H1 2009 financials and future plans

Joint MDM Bank published its first consolidated IFRS report after its merger with URSA Bank and held presentations for investors and journalists. The legal merger accession was registered on 6 August but already on 8 May it has been legally approved by shareholders meeting. The bank’s assets and capital were far below earlier indications in the pro-forma, and massive provisioning led to a significant loss in H1 2009. Management lowered its profitability forecast and raised expectations on loan losses for FY2009. However, management believes loan losses have bottomed out and that the bank is showing good progress in attracting liquidity and capital which should help to make repayments in a timely manner going forward. We maintain Neutral rating for MDM Bank and URSA Bank eurobonds.