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Moody’s Investors Service upgrades Alfa-Bank’s ratings to Ba1 from Ba2 —

October 31, 2017. TAG: Financial Services

On October 31, 2017, Moody’s Investors Service upgraded to Ba1 from Ba2 Alfa-Bank’s local-currency long-term deposit rating and local- and foreign-currency senior unsecured debt ratings. Moody’s also affirmed the bank’s Ba2 foreign-currency deposit ratings that are constrained by the foreign-currency deposit ceiling of Russia. The outlook is stable.

The ratings’ upgrade resulted from the reviewed scope of government support, due to the changed approach of the Central Bank to systemically important banks; this results in one notch of uplift to the bank’s senior unsecured debt and deposit ratings from its baseline credit assessment (BCA) of ba2. The BCA was affirmed at ba2 that reflects the bank’s strong solvency and liquidity metrics. The agency expects that the bank’s business model will remain resilient and the bank will continue to generate profits.

The agency noted the assets’ quality improvement in the first half of 2017: the share of problem loans reduced from the peak level of 12.7% in 2015 to 9.2% thanks to the bank’s successful work-outs of legacy problems. The reduced cost of risk and lower funding costs also helped the bank to substantially improve its profitability metrics: the return on average assets stood at 1.5% in 2016 and grew 2.2% (annualized ratio) in the first half of 2017. The agency indicated high level of capital adequacy and strong liquidity ensured by the constantly growing deposit base and a substantial liquidity cushion at 28% of total assets.

«The assigned credit ratings are an important confirmation of Alfa-Bank’s creditworthiness, the stability of its business model, and its systemic importance. Notably, the final local-currency long-term deposit rating is maintained on the level of Russia’s sovereign rating as well as the largest state banks, which is the highest indicator for a private bank in Russia», Alexei Tchoukhlov, Alfa-Bank Deputy Chairman of the Executive Board and Chief Financial Officer, said.

Founded in 1990, Alfa-Bank is a full-service bank operating in most sectors of the financial market, including retail and corporate lending, investment banking, leasing, factoring and trade finance.

By the end of July, 2017, Alfa-Banking Group became the largest private bank in Russia in terms of total assets, total equity, deposit and loan portfolios.

According to its IFRS Condensed Consolidated Interim Financial Statements for the first half of 2017 year, the Alfa Banking Group, which comprises ABH Financial, Joint Stock Company «ALFA-BANK» as well as its subsidiary financial companies, had total assets of USD 41.8 bn, gross loans of USD 26.0 bn, and total equity of USD 6.0 bn. Net profit for the first half of 2017 amounted to USD 436 mln.

As of June 30, 2017 Alfa-Bank serves around 381,600 corporate and 14.2 mln retail customers, while the branch network consists of 723 offices in Moscow, across Russia and abroad, including a subsidiary bank in the Netherlands and financial subsidiaries in the United Kingdom and Cyprus.

Alfa-Bank is an official European bank of the FIFA 2018™ World Cup and 2017 FIFA Confederations Cup. Since its foundation in 1990, the Bank is known for supporting large-scale cultural events. Many world-famous foreign musicians such as Ray Charles, Elton John, Tina Turner, Bryan Adams, Eric Clapton, Sting, Robbie Williams, Whitney Houston, Paul McCartney, Mark Knopfler and others have visited Russia with Alfa Bank’s assistance. In 2011, the bank organized a 4D show designed by internationally acknowledged David Atkins on Moscow’s Vorobyovy Hills visited by over 800 000 spectators. Alfa-Bank is also the organizer of the AlfaFuturePeople annual festival of contemporary music and technology.

ABH Holdings S.A.

ABH Holdings S.A. (ABHH) is a privately owned Luxembourg-based holding company investing into several banking groups in the CIS and Europe. ABHH includes Alfa-Bank (Russia), Alfa-Bank (Ukraine), Ukrsotsbank (Ukraine), Alfa-Bank (Belarus), Alfa-Bank (Kazakhstan) and Amsterdam Trade Bank N.V. You can find more information on ABH Holdings S.A.'s website