BELARUS NEWS AND ANALYSIS
DATE:
18/02/2008
Moody's assigns first time ratings to Belagroprombank, Belarus
The FINANCIAL -- Moody's Investors Service has on February 18 assigned the following global scale ratings to Belagroprombank: an E+ Bank Financial Strength Rating ("BFSR"), Ba1 long-term and Not-Prime short-term local currency deposit ratings, and B2 long-term and Not Prime short-term foreign currency deposit ratings.
All of the bank's ratings carry a stable outlook.
Belagroprombank's E+ BFSR, which translates into a Baseline Credit Assessment of B2, is underpinned by the bank's strong market position as the country's second-largest bank by assets, capital and retail deposits, as well as good capital adequacy, a low level of delinquent loans and acceptable profitability. The rating is constrained by the bank's fairly weak corporate governance due to the high level of government interference in the bank's business, as well as a very large exposure to the agricultural sector.
The bank's Ba1/Not-Prime long-term/short-term local currency deposit ratings factor in a very high probability of systemic support in the event of a stress situation given (a) the bank's 90.8% direct ownership by the Belarus government, (b) its important role in realizing the government programs for financing agricultural sector, which is a priority industry for Belarus, as well as (c) the bank's strong position in the country's banking system, represented by its 19% share of total assets and 11% share of retail deposits at the end of Q3 2007. As a result, this rating receives a four-notch uplift from the bank's B2 Baseline Credit Assessment.
Belagroprombank's B2 long-term foreign currency deposit rating is constrained by the foreign currency country ceiling for Belarus.About 55% of Belagroprombank's loan portfolio is attributable to Belarus' agricultural sector, which is a priority industry for the country. Most of the loans to this sector are provided as part of government programmes and are partly funded by the government via general capital contributions and deposits. Although the performance of agricultural loans has been quite strong over the past several years, the underwriting standards for such loans might not fully capture all key risks inherent in the relevant borrowers' (collective farms) business model.According to Moody's, Belagroprombank's BFSR could be upgraded if the bank significantly diversifies its loan book outside the agricultural sector and demonstrates good asset quality and profitability. Conversely, downward rating pressure on the bank's BFSR could arise from a significant weakening in asset quality and/or increasing borrower concentration.
Belagroprombank's local currency deposit rating is expected to change in tandem with the bank's BFSR. The bank's foreign currency deposit rating could be upgraded in the event of an upgrade of Belarus' foreign currency deposit ceiling. However, a downgrade is unlikely over the medium term as it is already constrained by that ceiling.
Based in Minsk, Belarus, Belagroprombank reported total IFRS consolidated assets, shareholders' equity and net income of US$2.89 billion, US$514 million and US$53.8 million, respectively, at the end of Q3 2007 (US$2.17 billion, US$408 million and US$43.5 million, respectively, at year-end 2006).
Source:
http://finchannel.com/index.php?option=com_content&task=view&id=6652&Itemid=38
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