OREANDA-NEWS. RusRating has changed the outlook on OAO IBSP’s credit rating from “stable” to “negative”. The rating itself is unchanged at "BB-" on the international scale and "BBB-" on the national scale.

According to the agency, the change in outlook reflects an ongoing long-term downward trend in credit activity, a rising percentage of restructured loans, a falling net interest margin, the increased impact of variable factors on earnings performance and growing sensitivity to risks in response to deteriorating macro-economic conditions.

The rating is based on the backing of IBSP’s owner, including his political connections and lobbying capacity; an established market presence in north-west Russia; a stable corporate client base; and a now-satisfactory capital base.

Constraining factors include above-average exposure to large-scale credit risks; elevated risk sensitivity; and a funding base that is only modestly diversified by individual client and (in the case of corporate creditors) likely dependent to a significant extent on Bazhanov’s business ties.

About the Bank

St. Petersburg International Bank (IBSP) is a mid-sized credit organisation and a market leader in north-west Russia. Bank President Sergei Bazhanov, who vacated that post between November 2008 and August 2013 while serving as senator for Ulyanovsk region, is its sole owner. IBSP’s business centres on the provision of loans and other services to major corporate clients. Most of its modest branch network is located in the Volga federal district. Market positions have been weakening since early 2012 as a result of slow growth. The Bank has well-developed ties to non-resident financial institutions and is moderately active in retail deposits.

Capital is sufficient and its quality is rated favourably. External funding is moderately well diversified by instrument type, with corporate balances the largest category; risks to stability are judged moderate in the light of above-average concentration by individual creditor and the noticeable role played by the Bank’s owner’s business ties. Asset quality is rated less than satisfactory and loan book quality is poor; in terms of revenue-generating potential overall asset quality is likewise low. Earnings performance is weak. Overall risk sensitivity is elevated. Liquidity risks are also elevated.