OREANDA-NEWS.  National Rating Agency has affirmed its national scale ‘AAA’ credit rating on Alfa-Bank JSC.

The rating affirmation reflects the bank’s strong liquidity position (with liquidity ratios comfortably above the regulatory minima, quick assets growing at a faster rate than demand liabilities and a trading portfolio that can be used as a source of additional liquidity); improved 2014 income and financial performance (Alfa-Bank posted the second-largest net income after Sberbank); above-market-average increase in key performance indicators and good asset-liability diversification.

We also note the corporate and retail loan books’ substantial increase in 2014 and the bank’s ability to raise funds in the capital markets despite the difficult economic situation (in 2014, Alfa-Bank issued US\$ 250 million Eurobonds in compliance with the Basel III requirements and RUB 20 billion domestic bonds).

Partially offsetting these strength is an increase, in both absolute and relative terms, of nonperforming loans (NPLs). Additionally, the loan loss reserves grew almost twice in 2014 due to Alfa-Bank’s exceptionally conservative approach to provisioning. The loan loss reserve coverage (LLR/NPL) was more than 200% as of March 1, 2015. In case of asset quality deterioration and LLR further growth, the N1 ratio (now at 11.6%) may limit the bank’s ability to demonstrate a growth rate similar to that achieved last year. At the same time, we note the owners’ capacity and capability to provide necessary funding to the bank.