Moody’s raises outlook on Russia’s Metallinvestbank from negative to stable

Moody's Investors Service has changed to stable from negative the outlook on the B2 long-term foreign and local currency deposit ratings of Metallinvestbank (MIB). The bank financial strength rating (BFSR) of E+ and Not-Prime short-term foreign currency deposit rating were affirmed. Concurrently, Moody's Interfax Rating Agency affirmed MIB's Baa1.ru long-term national scale rating (NSR).
According to Moody's, the rating action is driven by MIB's success in withstanding negative pressure on its business franchise, and in further materially expanding its deposit base in 2009. MIB has also gradually diversified its loan book away from related parties, and improved its core profitability through recurrent sources. MIB's liquidity position is adequate, supported by growing deposits — MIB's deposit base almost doubled in 2009, compared to a system-average growth of 20%.
The bank's capitalisation is currently adequate, with a Tier 1 ratio of 21% at 31 December 2009, and largely sufficient to absorb expected credit losses. Furthermore, the bank has been addressing the loan book concentration issue: MIB's credit exposure to top 20 borrowers has decreased to 160% of total equity at end-May 2010, from 200% in 2007.
Moody's said that MIB demonstrated reasonable financial performance in 2009 as the bank was able to generate a stable flow of interest and commission income sufficient to cover an increased level of provisioning which is expected to stabilise in 2010.