The Analytical Credit Rating Agency (ACRA) has affirmed to the International Bank for Economic Co-operation its credit rating A- under the international scale and AAA (RU) under the national scale for the Russian Federation. The outlook for the affirmed ratings is Stable.
In an official statement published on November 6, ACRA notes that IBEC's credit rating is due to its high financial performance, strong capital adequacy assessment, satisfactory risk profile assessment, adequate funding and liquidity assessment, as well as moderately strong assessment of the Bank's ownership structure and degree of support by countries -participants. The agency highly appreciated the structural changes in the Bank and the reorganization of the management system. This was one of the key aspects of the restart of IBEC in 2018 and led to an adequate level of management quality and transparency of operating activities.
ACRA underlines the strong capital position of the Bank. According to the Agency's analysts, IBEC maintains a significant level of capital that allows it to withstand the potential significant deterioration in asset quality, which may be caused by systemic events, including such as the COVID-19 pandemic. Thus, as of the end of June of this year, the capital adequacy ratio (Tier-1), calculated according to Basel standards, was 43.74%. At the end of the first half of 2020, the total volume of the Bank's assets increased by more than 13% and reached 739 million euro, mainly due to the growth of the loan and securities portfolio. As of June 30, IBEC's loan portfolio accounted for about 47% of all assets. Loans make up almost two thirds of the portfolio, while a significant share of outstanding loans is secured by corporate, state or other guarantees. In addition, according to the results of the first half of 2020, there are no non-performing assets on the Bank's balance sheet. It is due to the relaunch of IBEC in 2018, when 39 million euros of bad debts were written off. The Bank continues to implement proven industry risk management practices focused on ensuring stable availability of the liquidity and material buffer, maintaining strict underwriting criteria for credit, and diligent treasury operations.
The Agency notes that IBEC's liabilities are moderately diversified by funding sources. IBEC’s Net Stable Funding Ratio (NSFR) and Liquidity Coverage Ratio (LCR) stood at 125% and 113% respectively at end-June, 2020. The total volume of long-term borrowings reached 214 million euro, for the first time in the Bank's recent history exceeding the volume of short-term resources, and amounted to 50.5% of all liabilities. This is the result of the placement of bonds in October 2019 and June 2020 in the amount of 7 billion and 5 billion rubles, respectively, as well as the attracted tied loan for 11 years in the amount of 41 million euro.
The Agency highly appreciates the level of significance of the Bank's operations for the IBEC member countries. ACRA separately notes the participation of IBEC in the International Fund for Technological Development, established by the Russian Federation. IBEC acts as a trustee holder of the assets and financial agent of this fund, whose task is to provide soft loans for the implementation of high-tech projects in the IBEC member countries.
“Despite the difficult economic situation resulting from the ongoing global pandemic, the Bank's assets, and in particular the loan portfolio, are showing steady growth. ACRA's confirmation of the highest rating on the national scale once again demonstrates to counterparties and partners our high financial stability and credit quality,” – said Denis Ivanov, Chairman of the IBEC Board.