For the first time, the Analytical Credit Rating Agency (ACRA) has assessed Vnesheconombank assigning it a AAA (RU) top credit rating with a stable outlook.
The rating is at par with the sovereign rating of the Russian Federation due to the systemic importance of VEB as a development institution for the national economy. The Bank’s functions cannot be delegated to any other state or private agency.
The Bank’s credit profile is significantly influenced by the government. VEB Supervisory Board is chaired by the Russian Prime Minister, and the government fully controls and supports the Bank. The Bank enjoys legal immunity from bankruptcy procedures, with the 2017-2019 budget setting aside RUB 150 billion a year to increase VEB’s authorized capital.
ACRA believes that the Bank’s stand-alone credit profile depends on how successfully Vnesheconombank will implement its new 2021 strategy, which is geared towards the optimisation of the organisational structure, restructuring of the old bad loan portfolio and divestment of subsidiaries falling out of the strategic priorities.
“The Rating Agency recognised the positive contribution the Bank’s team and the new strategy have made. Guided by the plan of action, the Bank will focus its efforts on supporting the priority sectors, improving the quality of the Bank’s loan portfolio and financial performance and increasing customer satisfaction. VEB operations are contributing to Russia’s economic growth,” said Vnesheconombank’s Chairman Sergey Gorkov.
ACRA noted the overall improvement in the Bank’s financial performance. The level of troubled debt is compensated by provision coverage that grew from 50% to 71% in 2016. After a loss in 2016, in the first quarter of 2017, Vnesheconombank’s profits reached RUB 14.1 billion and capital adequacy ratio increased to 15.2%.