OREANDA-NEWS. National Rating Agency has raised its national scale credit rating on OBRAZOVANIE Joint-Stock Commercial Innovative Bank (OBRAZOVANIE ) to 'AA-'. The outlook for the rating is stable. In May 2011, the bank was assigned NRA's national scale 'A-' credit rating. The latest rating action (an affirmation of the national scale 'A+' credit rating with a positive outlook) dates Apr. 3, 2015.

Factors prerequisite for the positive outlook coming true and supporting the rating upgrade include OBRAZOVANIE's strengthening market position, positive growth dynamics in the past two years (its above-the-market growth pace), brisk lending activity, as well as consistently good loan quality, underpinned by the bank's adequate underwriting practices.

The bank has an adequate liquidity position, supported by its low-risk trading portfolio, which is mostly represented by securities included in the Central Bank of Russia (CBR) Lombard List. Its funding base is well-diversified. The shareholders are committed to re-capitalizing the bank on a regular basis and are going to take a number of measures to increase its equity in 2016. On May 29, OBRAZOVANIE placed its RUR 1.4 billion 3-year series 01 debut bond issue on MICEX-RTS. The CBR Board of Directors included these securities into CBR's Lombard List on Jul. 3, 2015.

Offsetting these strengths are the bank's decreased net interest margin and growing allowances to the loan loss reserve (typical of the whole Russian banking sector), which considerably affect its bottom-line result. NRA also notes the falling corporate-loans-to-total-loans ratio and OBRAZOVANIE's increasing reliance on retail funding sources.