OREANDA-NEWS. October 5, 2012. Pavel Neumyvakin, Executive Director of Bank Petrocommerce, has commented on the decision of Moody’s Investors Service:

Bank Petrocommerce does not agree with the rating agency’s decision: our performance indicators have considerably improved since December 2011, when Moody’s Investors Service affirmed the Bank’s rating at the level of Ba3/NP (international scale) and Aa3.ru (national scale). Therefore, we are perplexed by the position taken by the rating agency.

Last year, the Bank’s Board of Directors approved a new five-year development strategy, which has been consistently implemented since then. In order to comply with the strategy, the Bank has performed a large-scale transformation of its business processes, organizational chart and regional network. These modifications resulted in a significant growth in all key areas. For instance, today, the paces of growth of the Bank’s loan portfolio considerably outperform the market average level: in 1H2012, the Bank’s retail loan portfolio increased by 25%, with the market growth being 18%; the corporate loan portfolio went up by 10%, with the market growing at 6%. Besides, the loan portfolio growth outpaces the levels provided for by the strategy: the level planned for the end of 2012 was reached by September in terms of corporate lending, and the SME segment is also characterized by high performance indicators — currently, loans to SMEs exceed RUR 1.2 bln (vs. approximately RUR 100 bln as at year-start) with no overdue debt. The Bank continues to diversify its business: the share of aggregate income from retail lending and factoring increased from 18% to 22%, with the aggregate portfolio share going up from 16% to 19%. The Bank is also pro-actively diversifying its corporate loan portfolio — 80% thereof in 1H2012 accounted for the medium-sized client segment. Overall business efficiency and profitability are enhancing, the risk management system quality is constantly being upgraded, liquidity ratios are well above the regulatory floor level. Not only does the Bank keep in line with the peer banks’ growth rates of business indicators (in particular, net interest income, interest margin, fee and commission income), but also outperforms some of them. The share of non-performing loans (NPL 90+) is also coming down from 11.7% as at year-start to 10.5% as of 30.06.2012.

Therefore, if the doubts about the implementation of strategic objectives could have been reasonable a year ago, 1H2012 results allow to state with confidence that the Bank’s new business model is operating successfully.

In view of the above, the decision of Moody’s Investors Service in respect of the Bank can hardly be considered logical and consistent. Such actions undertaken by international rating agencies apparently evidence their extremely conservative and preconceived attitude to the Russian economy overall and Russian banks and companies in particular. They are inclined to be cautious by embedding conservative concerns and market risk ratios in their rating valuations.