OREANDA-NEWS. RusRating has lowered the outlook on MTS-Bank’s credit rating from “stable” to “negative”. The rating itself is unchanged at "BBB-" on the international scale and "AA-" on the national scale.

The change in outlook reflects reduced support from the Bank’s parent group; a weakening of asset quality in response to macro-economic conditions; a rising delinquency ratio; and increased overall risk sensitivity.

The rating is based on the financial strength of the Bank’s owner; its position as settlement centre for the AFK Sistema group; and a wide, diversified client base drawn from affiliated firms.

Constraining factors include weak earnings and a modest assessment of the quality of corporate governance.

About the Bank

MTS-Bank (formerly known as MBRD) is a larger commercial bank by assets and part of the AFK Sistema group, one of the largest diversified public companies in Russia and the CIS, whose principal beneficiary owner is Vladimir Yevtushenkov. Working with (mostly friendly) large and mid-sized companies in a range of industries is the Bank’s core business. In recent years it has actively developed its retail presence and service network. Securities market activity is moderate.

Capital is sufficient and of good quality. Most external funding previously originated with affiliated corporate clients (members of the AFK Sistema group), but diversification has improved thanks to rising retail balances. Asset quality is rated satisfactory, based mainly on corresponding assessments of client loans and the securities portfolio. Earnings performance is weak against a background of pressure from loan provisioning and business development costs; the Bank's net interest margin is healthy. Risk sensitivity is moderate thanks to scope for shareholder support. Liquidity is sufficient.