Moody's on May 29 upgraded JSCB Novikombank's long-term bank deposit rating to Ba3 from B1, and changed the outlook on the rating to stable from positive.
The agency also upgraded the Russia-based bank's baseline and adjusted baseline credit assessments to "b2" from "b3," long-term counterparty risk ratings to Ba2 from Ba3, and long-term counterparty risk assessment to Ba2(cr) from Ba3(cr).
Moreover, the ratings agency affirmed the company's Not Prime short-term counterparty risk ratings and short-term bank deposit rating, and Not Prime(cr) short-term counterparty risk assessment.
The upgrades reflect an improvement in the bank's capital adequacy metrics, net interest income, operating efficiency and earnings generation relative to its risk appetite following increased integration with its shareholder, Russia's Rostec. The agency incorporates a high level of support for the bank from the Russian government that lifts the bank's Ba3 deposits ratings two notches above its b2 baseline credit assessment.
The agency also noted that despite providing limited resilience to potential impairments of largest credit exposures, the bank increased its ratio of tangible common equity to risk weighted assets to 6.6% at the end of 2018, up from 2.0% a year earlier, and decreased its ratio of problem loans to gross loans to 8.5% from 23.6% in 2018.
The outlook on the company was changed to stable from positive, which is aligned with the stable outlook on Russia's Baa3 issuer ratings and reflects the bank's stabilized credit profile.