EM Credit Notes: Russian Standard Bank

Russian Standard Bank (B+/Ba3/B+): Stabilising the balance sheet in Q1 2010

Russian Standard Bank, one of the leading retail banks in Russia, published FY2009 audited IFRS results and an unaudited Q1 2010 report. The bank’s balance sheet continued to shrink due to debt repayments and the bottom line for FY2009 was negative. However, in Q1 2010 the bank returned to profitability and growing customer accounts are in part compensating for the wholesale funding outflow. We believe the deleveraging of the bank’s balance sheet still has room to continue, but its liquidity position shows its ability to service debt in a timely manner. As of end-2009 the bank remained in the top five retail lenders ahead of MDM Bank, HCFB and Renaissance Credit. Should the idea to include Russian Standard in the state postal bank project materialise this might give additional support for Russian Standard Bank debt securities. We find the bank’s short-dated Eurobonds one of the good defensive instruments.