Expert RA affirms Bank Monetniy Dom’s rating

Expert RA, a rating agency, affirmed OAO Bank Monetniy Dom’s credit rating at B++, Acceptable solvency level.

The rating was mainly affirmed because the bank hasn’t borrowed a lot of money from large organizations: as of April 1, 2010, only 4.4% of the bank’s gross liabilities was borrowed from ten creditors. Also, the agency’s analysts think favorably of the great share of long-term liabilities the bank has: over 47% of the company’s liabilities, in fact, have to be paid back in more than 180 days. Finally, Monetniy Dom can boast good instant and current liquidity of Í2 = 91.8% and Í3 = 132.0%, respectively, as of April 1, 2010.

Besides, the good loan guarantees (securities, sureties, and guarantees compensated the possible bad debt by 246.1% on April 1, 2010) and low large-scale bad debts risks (only 18.9% in the total volume) made a good impact on the bank’s rating.

On the other hand, the rating could not be promoted because of the low quality of debt (Types IV and V quality category loans made up 11.7% of all the loans issued by the bank, overdue debt of legal entities and private individuals came to 10.5% and 11.4%, respectively, on April 1, 2010.) Expert RA’s Bank Ratings Director Irina Veliyeva believes the deterioration of the bank’s lending portfolio led to losses: Monetniy Dom’s ROE dropped by 9.2% in 2009 and the bank’s capital grew smaller.

The other negative factors are great capital immobility (about 83.6% of the bank’s capital on April 1, 2010) and the loan reserves policy that is not seen as conservative enough (the reserve coefficient was 2% lower than the share of types IV and V quality category loans on April 1, 2010).

OAO Bank Monetniy Dom issues loans to private individuals and small businesses and offers deposits for private individuals’ savings. The company was established in 1990 and joined the Deposit Insurance System in December 2004. Its net assets (calculated in accordance with the Russian Accounting Standards) reached 7.04 billion RUR on April 1, 2010 (the 233d position in Expert RA’s rating. The bank’s own funds amount to 1.11 billion RUR; its pre-tax losses came to 13.4 million RUR in the first quarter of 2010.

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