OREANDA-NEWS. National Rating Agency has affirmed its national scale credit rating on M2M Private Bank OJSC at ‘A’.

The rating affirmation reflects the fact that in 2014, the bank increased its authorized capital and equity (partly by raising subordinate debt), improved its capital adequacy ratio and modernized its IT infrastructure (including the introduction of a new CRM system and update of the internet banking software and product line and loyalty rewards programs for target customers). The bank maintains its strong position in the private banking market. We also note its stable customer base and prudent lending and trading strategies, which take into account the actual market changes and those expected in 2015. In particular, the company aims to build up its liquidity buffer and enhance profitability, in part by cutting modernization expenses, which affected its 2014 financial result, rather than striving to improve its key financial performance metrics.

Offsetting these strengths are the bank’s persistent dependence on customer deposits, loan book single name concentration and high currency risk. With 61% of assets and more than 50% of liabilities nominated in foreign currencies, the bank saw its assets, loan book and provisions increase due to currency translation in 2014, but also experienced a reduction of the LTV ratio, i.e. customer loans divided by the total value of property (mostly commercial property and finished housing projects in the Moscow Region) used to secure the loans. We take into account the bank’s business profile when analyzing its asset-and-liability structure.