OREANDA-NEWS. National Rating Agency has lowered its national scale credit rating on Investtorgbank PJSC JSCB to 'A+'. The outlook for the rating is negative. On Aug. 19, 2010, the bank was assigned NRA's credit rating of 'A+', subsequently raised to 'AA-' on Sept. 21, 2011 and affirmed with a negative outlook on May 13, 2015.

The rating downgrade and negative outlook assignment reflect the deterioration of Investtorgbank's loan book quality in 2Q 2015, with non-performing loans (NPLs) growing in absolute terms by 12.8%, or RUB610.7 million and as a proportion of total loans to 7.8% from 6.9%, loans in higher risk categories (IV and V) growing to around 19% of total loans as of June 1, 2015, and the share of 20 largest borrowers increasing to 47.1% as of the same date. Under these loan trends, the bank had to build up its loan-loss provisions (+26.1%, or RUB1.4 billion over 2Q 2015), which affected its financial result (a loss of RUB2.25 billion for 1H 2015; net income before LLP of minus RUB372.8 million).

Additionally, NRA notes the bank's low net interest margin (despite its upward trend in 2Q 2015), partially reflecting the bank's efforts to reduce the role of deposits in growing its funding base (by lowering the interest rates). At the same time, the plan to increase the inflow of corporate deposits in 2Q 2015 has been put off - as a result, Investtorgbank's financials show an outflow of RUB3 billion (-14.2%) in corporate deposits in 2Q 2015.

The RUB2.2 billion loss for 1H 2015 was the result of additional provisioning of around RUB2.6 billion.

The rating continues to be supported by the bank's solid liquidity position, with the liquidity ratios comfortably above the regulatory minima, good-quality trading book, used, among other things, as a tool for liquidity management, as well as the good loan book collateral protection (the collateral-to-loan ratio is 178%).