The credit rating of Bank RRDB (JSC) (hereinafter, RRDB or the Bank) stems from the Bank’s sustainable business profile (bbb+), strong capital adequacy, conservative risk profile, and adequate funding and liquidity assessment. The credit rating also takes into account the Bank’s systemic importance, sustainable competitive advantage, and the high likelihood of support from the parent holding company (hereinafter, the Supporting Entity or the SE).
RRDB is a rather large Russian bank that acts as the core settlement center for the Supporting Entity and provides a wide range of services to the SE’s business partners, employees, and a wide range of market clients.
key assessment factors
The sustainable business profile (bbb+) mainly reflects RRDB’s strong position in the Russian banking system as one of the 15 largest banks by equity. The Bank’s diversification of operating revenues is low due to the specifics of its business (the Herfindahl-Hirschman index was 0.45 on December 31, 2024). However, RRDB’s revenues continue to grow confidently. ACRA notes that the macroeconomic conditions set out in the Bank’s strategy are assessed as adequate, while the assessment of quality of management corresponds to the scale of its activities.
RRDB is the administrator of Peresvet Bank (PJSC), for which a financial rehabilitation has been launched. ACRA assesses the Bank’s participation in the rehabilitation (which runs until 2032) as a neutral factor in terms of its influence on the creditworthiness of RRDB.
ACRA assesses the Bank’s capital adequacy as strong. Capital adequacy ratios are maintained at an adequate level, which enables RRDB to withstand growth of the cost of credit risk of more than 500 bps without violating capital adequacy requirements. At the same time, the Bank demonstrates sufficiently high potential to generate capital (the averaged capital generation ratio (ACGR) calculated for the past five years exceeds 100 bps). Operating efficiency indicators deteriorated somewhat in 2024, which is due to the state of the operating environment.
RRDB’s conservative risk profile assessment stems from the rather high concentration of the loan portfolio on certain lending segments. At the same time, ACRA notes the consistently low level of non-performing debt and share of loans provided to companies from high-risk industries in the Bank’s loan portfolio, as well as the adequate degree of security for loans issued. The credit quality of the portfolio of contingent liabilities is assessed as rather high. RRDB’s securities portfolio was good quality, well-diversified, and had a low level of market risk as of December 31, 2024.
Adequate funding and liquidity assessment. The strong liquidity position is driven by a short-term liquidity surplus in ACRA’s base case and stress scenarios. The Bank’s long-term liquidity shortage indicator is also at a comfortable level, which is due to, among other things, regular prolongation of a significant volume of funds raised from clients. In addition, the Bank possesses a number of instruments to attract additional liquidity if necessary.
The high concentration of funding on the largest source — corporate funds, as well as on the largest group and the 10 largest groups of lenders — constrains the assessment of the factor. The Bank’s dependence on regulatory funds was assessed as low as of December 31, 2024.
RRDB’s sustainable competitive advantage is expressed in the ability to service the Supporting Entity whose business is geographically diversified and very large. In this regard, ACRA adjusts the Bank’s standalone creditworthiness assessment (SCA) one notch upward.
Importance for the financial system. In ACRA’s opinion, RRDB’s systemic importance is moderate, given the size of its assets, scale of its business, and its active involvement in servicing strategically important enterprises. Therefore, in the event of stress, the Bank can receive government support for capital or liquidity. Due to this, the final rating of RRDB takes into account the addition of one notch to the SCA after adjustments.
High likelihood of support from the SE. ACRA assumes that the creditworthiness of the Supporting Entity is at the maximum and it has sufficient resources to provide RRDB with capital and liquidity if necessary. The Supporting Entity’s recapitalization of the Bank in 2016 confirms the SE’s interest in developing RRDB’s business. The high degree of support is also backed by the SE’s deep strategic and operational control over the Bank. The assessment of the likelihood of support is capped by moderate strategic risk for the Supporting Entity, given the differing business areas of the Bank and the SE. Taking the above into account, ACRA has added three more notches to the Bank’s SCA after adjustments.
KEY ASSUMPTIONS
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Cost of credit risk at no higher than 3% within the 12 to 18-month horizon;
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Rather low level of non-performing and potential non-performing loans;
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Comfortable capital position within the 12 to 18-month horizon.
potential outlook or rating change factors
The Stable outlook assumes that the rating will highly likely stay unchanged within the 12 to 18-month horizon.
A positive rating action may be prompted by:
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Lower concentration of loans on certain lending segments;
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Further growth in the size of RRDB’s operations on the scale of the Russian financial system, leading to an increase in its systemic importance.
A negative rating action may be prompted by:
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Significant decline in capital adequacy ratios and/or capital generation, as well as lower operational efficiency;
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Deterioration of liquidity position;
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Significant narrowing of the functions and declining importance of the Bank for the SE.
rating components
SCA: bbb+.
Adjustments: individual adjustment due to the sustainable competitive advantage: plus one notch to the SCA.
Systemic importance: plus one notch to the SCA after adjustments.
Support: plus three notches to the SCA after adjustments; ACRA assumes that if necessary, the SE will be able to provide extraordinary support to the Bank in the form of capital and/or liquidity.
issue ratings
Bank RRDB (JSC), 001R-05 (RU000A1025H2), maturity date: September 18, 2025, issue volume: RUB 5 bln — AA(RU).
Rationale. The issue represents senior unsecured debt of RRDB. Due to the absence of either structural or contractual subordination of the issue, ACRA ranks it as equal to other existing and future unsecured and unsubordinated debt obligations of the Bank in terms of priority. According to ACRA’s methodology, the credit rating of the issue is equivalent to that of Bank RRDB (JSC).
regulatory disclosure
The credit ratings have been assigned to Bank RRDB (JSC) and the RU000A1025H2 bond issue of Bank RRDB (JSC) under the national scale for the Russian Federation based on the Methodology for Assigning Credit Ratings to Banks and Bank Groups Under the National Scale for the Russian Federation, Methodology for Assigning Credit Ratings with External Support, and the Key Concepts Used by the Analytical Credit Rating Agency Within the Scope of Its Rating Activities. The Methodology for Assigning Credit Ratings to Financial Instruments on the National Scale for the Russian Federation was also applied to assign the credit rating to the above issue.
The credit ratings of Bank RRDB (JSC) and the RU000A1025H2 bond issue of Bank RRDB (JSC) were published by ACRA for the first time on July 25, 2017 and September 24, 2020, respectively. The credit rating of Bank RRDB (JSC) and its outlook and the credit rating of the bond issue of Bank RRDB (JSC) are expected to be revised within one year following the publication date of this press release.
The credit ratings were assigned based on data provided by Bank RRDB (JSC), information from publicly available sources, and ACRA’s own databases. The rating analysis was performed using the IFRS financial statements of Bank RRDB (JSC) and the financial statements of Bank RRDB (JSC) drawn up in compliance with the requirements of the Bank of Russia. The credit ratings are solicited and Bank RRDB (JSC) participated in their assignment.
In assigning the credit ratings, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided additional services to Bank RRDB (JSC). No conflicts of interest were discovered in the course of credit rating assignment.
