"Binbank": reliability rating. "Binbank" in the rating of Russian banks

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

"Binbank" was formed in 1993 as a captive bank and has now become a medium-sized commercial financial institution with a branch network in many Russian regions. In 2014, its net income increased fivefold, reaching net profit figures of more than $69 million (more than 3.9 billion rubles). Binbank's reliability rating, according to the Central Bank, is 20th with assets of 413.2 billion rubles.

Strong growth

Binbank has been developing rapidly over the past decade, stepping out of a series of medium-sized banks into the first Russian twenty. The crisis year 2014 turned out to be especially intense for many. The financial institution has acquired several assets, including Binbank Credit Cards (formerly Moskomprivatbank), Binbank Murmansk (formerly DNB Bank OJSC) and ROST banks. And 55%assets in the total share were provided by Binbank itself. As a result, the rating of the organization increased significantly.

The acquisition of assets helped to diversify the client base, increase business diversification and improve the position of the consolidated group in terms of assets: according to this indicator, the bank ranks seventh in the all-Russian rating (as of 1.04.2015), a year earlier - only 40th place.

Rating of banks: "Binbank"

The economic crisis has significantly shuffled the deck of Russian financial institutions. If some of them needed serious state support, then Binbank, on the contrary, strengthened its positions. Moreover, the influential portal Banki.ru, thanks to the rapid success of this particular organization, recognized it as the bank of the year 2014. It was ahead of the recognized giants. Among them are Sberbank, VTB, Gazprombank and other partners.

Foreign experts also noted Binbank. The rating of analysts from Standard & Poor's corresponds to the rank of "B". This is a good indicator for large Russian banks, reflecting both the strength and certain risks inherent in regional economies. Other indicators:

• 3rd place among the most reliable commercial banks in the Russian Federation (1.04.2015).
• 10th in terms of profitability (1.04.2015).
• 18th in the Interfax-100 rating (Q1 2015).
• 27th in terms of net worth (April 1, 2015).

Analyst forecasts

Significant asset acquisition seen lastyear, imposes certain risks. Banking analysts note that the strategy of Binbank is opportunistic and at the same time aggressive. It may be exposed to high integration risks given the significant size of the assets acquired and plans for further business expansion in the currently unfavorable operating environment for banks in Russia. Meanwhile, the disparate structures within the group can sufficiently complement each other to form an organization that will become a strong market player with a sustainable business model in the long term and a stronger ability to generate profits.

The positive factor is that the acquired assets are in line with the long-term strategy of strengthening the market position of Binbank in the retail segment and diversifying the business profile. Thanks to the newly acquired assets, the firm's position in the retail customer deposits segment has improved. As of April 1, 2015, Binbank was ranked 7th in the rating of Russian banks by this indicator. In addition, the company was able to enter the market of several important Russian regions. In the future, the branch network will include 450 points of sale in more than 60 regions by the end of 2015 after the planned closure of inefficient branches.

Reliability Rating

BankStars IA, based on the results of an express analysis of financial statements, assigned PJSC "Binbank" a reliability rating of "satisfactory". According to BankStars, this institutioncharacterized by a moderate risk of non-fulfillment of its obligations to creditors and depositors. However, the bank's stability is sensitive to adverse developments in the situation.

Liquidity

Based on the analysis of the balance sheet structure of PJSC "Binbank", the BankStars agency assessed the liquidity rating as moderately high. The conclusions are based on the volatility of funds in deposits and settlement accounts of a bank and a group of banks with similar assets. The company is able to ensure timely fulfillment of repayable obligations on loans and deposits in the event of a possible stress scenario.

Capitalization

By 2014, an increase in the level of capitalization of the financial group to 13.05% is stated due to an increase in equity capital while reducing the volume of assets of PJSC Binbank. The rating of the ability to compensate for possible losses in case of implementation of stress scenarios with own funds is estimated as moderately high.

Loan portfolio quality

According to the reporting, the volume of overdue loan debts of Binbank as of 2014-01-01 amounted to 3,623.61 million rubles. (2.63% of the loan portfolio), having increased in December 2013 by 189.61 million rubles. Provisions for possible losses increased by 156.14 million rubles. and amounted to 5752.92 million rubles as of the reporting date. (4.17% of the loan portfolio). Provisions for possible loan losses formed by the bank cover the current overdue loan debt with a coefficient of 1.59. As of the reporting date, the loan portfolio is characterized byslightly less.

Growth Factors

The following factors influence the place in the rating of Binbank among competitors/partners.

Positive:

• increase in customer base and growing market share;
• strong support in the form of equity injections from shareholders;
• diversification of the resource base.

Negative:

• high exposure to integration risks associated with assets acquired in 2014 and aggressive growth strategy;
• Weak operating margins, mainly due to weak portfolio performance of high-risk unsecured retail loans;
• deceleration of macroeconomic growth and unfavorable operating conditions for all Russian banks.

Main Shareholders

The main shareholders, M. O. Shishkhanov and M. S. Gutseriev, are expected to support the development of Binbank and provide sufficient capital to achieve ambitious growth goals. In 2011-2014, they made regular capital injections: 16.3 billion rubles in Tier 1 capital and 3.9 billion rubles in Tier 2 capital.

Assets owned by Shishkhanov and Gutseriev in non-banking sectors generally complement Binbank's business. In particular, pension funds and insurance companies owned by the financier Shishkhanov can create a synergy effect by offering comprehensive services to clients, allowing them to grow their client base.

Capitalization and profitability of PJSC "Binbank"

Credit rating in terms of capitalization and profitability is characterized as moderate. Capitalization is provided mainly by capital injections by shareholders. The assessment of the indicators as moderate is based on the calculations that the RAC ratio, excluding adjustments for diversification and concentration risks, will be about 5.1% in the next 18-24 months. This forecast is determined by the following expectations:

• Increase in assets by 34% in 2015 due to the consolidation of the banks of the ROST group and Binbank Murmansk (14%), as well as organic growth (20%).
• Injection of capital in the amount of 10 billion rubles. in 2015, despite the fact that 6 billion rubles have already been received in April.
• Capital gain (1.5 billion rubles) as a result of the issuance of new securities for the consolidation of Binbank Murmansk.
• Capital gain resulting from the initial recognition of assets of the banks of the ROST group.
• Decrease in net interest margin from 4.3% in 2014 to 4% in 2015 due to increased funding costs and increased competition in the Russian banking sector.
• Provisioning costs around 3.5% in 2015-2016 compared to 2.1% in 2012-2014 (average) due to worsening overall economic conditions.

Prospects

In 2014 Binbank's access to reliable corporate clients improved. It is a private financial institution and is not subject to regulatory sanctions. US and EU authorities (as opposed to large Russian state-owned banks). In addition, the growing size of Binbank allowed it to serve larger clients. As a result, the company attracted a number of private and public corporations as borrowers and savers, which led to the strengthening of its client base. Related party lending risks are assessed as moderate: loans to related parties accounted for about 2.6% of the loan portfolio (December 31, 2014).

During the period 2015-2016 Binbank's operating income is forecast to be weak due to expected weak performance in the unsecured retail loans and credit card segments. Profit from operating activities in 2014 was negative as a result of significant expenses for the formation of reserves of Binbank Credit Cards JSC, acquired last year.

Positive factor - the regulatory capital of "Binbank" is supported by a subordinated loan in the amount of 12.7 billion rubles. As of April 1, 2015, the organization's capital adequacy ratio was 13.2%, which is significantly higher than the minimum level of 10% set by the regulatory body.