ACRA upgraded Promsvyazbank's credit rating

AK&M 14 October 2021 12:22

On October 13, 2021, the analytical credit rating Agency upgraded the credit rating of PJSC Promsvyazbank to AA+(RU), the outlook is stable, and its bond issues to AA+(RU). This is stated in the agency's message.

Credit rating of PJSC Promsvyazbank increased due to a change in the assessment of the likelihood of providing extraordinary support due to the actual and expected increase in the scale of the bank's business and the volume of operations within the framework of the legally defined PSB-specific functionality, including taking into account the regular increase in the bank's capital by the state and the growth in the amount of funds of enterprises of the military-industrial complex in bank accounts.

At the same time, ACRA increases the assessment of the bank's own creditworthiness, which is associated with an increase in its profitability since the beginning of its operation under the new business model and the level of capital adequacy, as well as with the exclusion from the loan portfolio of problem loans that are not related to the current development strategy of the credit institution and are fully covered by reserves.

In the period from mid-2019 to the end of the first half of 2021, the share of state defense contracts for servicing the bank increased from 30 to almost 70%. At the same time, the number of defense industry customers in service has more than doubled. The growth of active operations occurs in parallel with the increase in the volume of funds of defense companies placed in the bank. During the specified period, the volume of funds of legal entities (excluding state and government funds) attracted by the PSB increased by almost 1 trillion rubles (in the period from 30.06.2020 to 30.06.2021, the growth amounted to about 700 billion rubles), a significant part of which was formed by means of defense companies.

The state regularly provides the bank with capital, ensuring its ability to increase the volume of lending to defense segments of the economy in accordance with the current development strategy. For the period from 2019 to 2020, the total volume of the planned capitalization of the PSB at the expense of the state and the capital received from other banks amounted to about 58 billion rubles, including the introduction of Svyaz-Bank shares into the authorized capital of the PSB and its subsequent accession in 2020. In 2021-2022, the bank also expects additional capitalization from both the state and other banks as part of the defense industry loan assignment program. In addition, due to the transfer to the status of an indefinite subordinated deposit received upon the accession of JSC ROSCOSMOSBANK, the size of the PSB's fixed capital was increased by 27 billion rubles in 2021.

The Bank demonstrates a significant increase in the main volume indicators of activity, in particular, assets, own funds and balances on customer accounts for the period from 01.07.2020 to 01.07.2021 increased by more than 40%. The assets of the PSB accounted for about 3% of the assets of the banking sector, the share of corporate clients' funds exceeded 4%, and the share of loans granted to them — 3%.

The level of the bank's credit rating is determined primarily by its important role for the state, which is confirmed by the fact that PSB has the status of a reference bank for the country's defense industry, as well as a very strong influence of the state on its creditworthiness. At the same time, ACRA expects that the bank's position in the defense industry will continue to strengthen. According to the agency, in the event of a scenario of systemic economic stress and/or a significant deterioration in the bank's own creditworthiness, the state will provide it with sufficient extraordinary support in the form of capital and/or liquidity to meet creditors' claims.

USC PSB reflects its moderately strong business profile, strong capital adequacy, weak risk profile assessment and satisfactory funding and liquidity position.