Binbank was established in 1993 as a captive bank and has now become a medium-sized commercial financial institution with a branch network in many Russian regions. In 2014, his net income increased fivefold, reaching net profit figures of more than $ 69 million (more than 3.9 billion rubles). According to the Central Bank, Binbank's reliability rating is 20th place with assets of 413.2 billion rubles.
Rapid growth
The Binbank has been developing rapidly over the past decade, stepping from a series of medium-sized banks to the first Russian twenty. The year of crisis was especially intense for many 2014. The financial institution acquired several assets, including Binbank Credit Cards (formerly Moskomprivatbank), Binbank Murmansk (formerly DNB Bank OJSC) and ROST banks. Moreover, 55% of the assets in the total share was provided by Binbank itself. The rating of the organization eventually increased significantly.
The acquisition of assets contributed to the diversification of the client base, increasing the diversification of the business and improving the position of the consolidated group in terms of assets: according to this indicator, the bank ranks seventh in the all-Russian rating (as of April 1, 2015), a year earlier it was only 40th.
Rating of banks: Binbank
The economic crisis has noticeably shuffled a deck of Russian financial institutions. If some of them required serious state support, then Binbank, on the contrary, strengthened its position. Moreover, the influential portal Banki.ru, thanks to the rapid success of this particular organization, recognized it as the bank of the year 2014. It is ahead of recognized giants. Among them are Sberbank, VTB, Gazprombank and other partners.
Foreign experts also noted Binbank. Standard & Poor's analyst rating is B. This is a good indicator for large Russian banks, reflecting both the strength and certain risks inherent in regional economies. Other indicators:
- 3rd place among the most reliable commercial banks in the Russian Federation (04/01/2015).
- 10th most profitable (04/01/2015).
- 18th in the Interfax-100 rating (1st quarter of 2015).
- 27th in terms of equity (04/01/2015).
Analyst Forecasts
The acquisition of significant assets over the past year poses certain risks. Banking analysts say that Binbank’s strategy is opportunistic and at the same time aggressive. It may be subject to high risks of integration, taking into account the significant size of the acquired assets and plans for further business expansion in the current unfavorable operating environment for banks in Russia. Meanwhile, disparate structures within the group can sufficiently complement each other and form an organization that will become a strong market player with a stable long-term business model and a stronger ability to generate profits.
A positive factor is that the assets acquired comply with Binbank’s long-term strategy to strengthen its retail market position and diversify its business profile. Thanks to recently acquired assets, the company's position in the retail customer deposits segment has improved. As of April 1, 2015, Binbank occupied the 7th place in the rating of Russian banks by this indicator. In addition, the company was able to enter the market of several important Russian regions. In the future, the branch network will have 450 points of sale in more than 60 regions until the end of 2015 after the planned closure of inefficient branches.
Reliability Rating
According to the results of the express analysis of financial statements, BankStars IA assigned Binbank PJSC a reliability rating of “satisfactory”. According to BankStars, this institution is characterized by moderate risk of default on its obligations to creditors and depositors. However, the stability of the bank is sensitive to adverse developments.
Liquidity
Based on an analysis of the balance sheet structure of Binbank PJSC, BankStars rated the liquidity rating as moderately high. The conclusions are based on the volatility of funds in deposits and on bank accounts of a bank and a group of banks that are similar in size of assets. The company is able to ensure timely fulfillment of repayable obligations on loans and deposits in the event of the implementation of a possible stress scenario.
Capitalization
By 2014, an increase in the level of capitalization of the financial group to 13.05% was observed due to an increase in equity while reducing the volume of assets of Binbank PJSC. The rating of the ability to compensate for possible losses in the event of the implementation of stress scenarios by one's own means is rated as moderately high.
Loan portfolio quality
According to the statements, the volume of overdue loan debts of Binbank as of 01.01.2014 amounted to 3623.61 million rubles. (2.63% of the loan portfolio), having increased in December 2013 by 189.61 million rubles. Provisions for possible losses increased by 156.14 million rubles. and amounted to 5752.92 million rubles at the reporting date. (4.17% of the loan portfolio). Reserves for possible losses on loans formed by the bank cover current overdue loans with a coefficient of 1.59. At the reporting date, the loan portfolio is characterized by a slightly smaller share.
Growth factors
The following factors influence the place in the rating of Binbank among competitors / partners.
Positive:
- increasing customer base and growing market share;
- strong support in the form of capital injections by shareholders;
- diversification of the resource base.
Negative:
- high exposure to integration risks associated with assets acquired in 2014 and an aggressive growth strategy;
- weak core business profitability, mainly due to weak portfolio of unsecured retail loans at high risk;
- slowdown in macroeconomic growth and adverse operating conditions for all banks in the Russian Federation.
Major shareholders
It is expected that the main shareholders - M.O. Shishkhanov and M.S. Gutseriev - will support the development of Binbank and provide sufficient capital to achieve large-scale growth goals. In 2011-2014, they made regular injections into the capital: 16.3 billion rubles in the capital of the 1st level and 3.9 billion rubles in the capital of the 2nd level.
Assets owned by Shishkhanov and Gutseriev in non-banking sectors generally complement Binbank’s business. In particular, pension funds and insurance companies owned by financier Shishkhanov can provide a synergy effect by offering customers comprehensive services, allowing them to build a client base.
Capitalization and profitability of Binbank PJSC
The credit rating for capitalization and profitability is characterized as moderate. Capitalization is mainly provided by capital injections by shareholders. The assessment of indicators as moderate is based on the calculations that the RAC coefficient without adjustments for diversification and concentration risks will be about 5.1% in the next 18-24 months. This forecast is determined by the following expectations:
- An increase in assets by 34% in 2015 due to the consolidation of banks of the ROST Group and Binbank Murmansk Group (14%), as well as organic growth (20%).
- An injection of capital in the amount of 10 billion rubles. in 2015, despite the fact that 6 billion rubles had already arrived in April.
- Capital gains (1.5 billion rubles) as a result of the issue of new securities for the consolidation of Binbank Murmansk.
- Capital gains arising from the initial recognition of the assets of the ROST Group banks.
- Net interest margin decreased from 4.3% in 2014 to 4% in 2015 due to increased funding costs and increased competition in the Russian banking sector.
- The cost of forming reserves is about 3.5% in 2015-2016 compared with 2.1% in 2012-2014 (average) due to the deterioration of the overall economic situation.
Prospects
In 2014, Binbank’s access to reliable corporate customers improved. It is a private financial institution, therefore, sanctions from US and EU regulatory authorities do not apply to it (unlike large Russian state-owned banks). In addition, the growing size of Binbank allowed him to serve larger customers. As a result, the company attracted a number of private and state corporations as borrowers and investors, which led to the strengthening of its client base. Lending to related parties is assessed as moderate: loans to related parties accounted for about 2.6% of the loan portfolio (12/31/2014).
In the period 2015-2016. Binbank’s weak profit from operating activities is projected due to expected weak performance in unsecured retail loans and credit cards. The operating profit in 2014 was negative as a result of significant expenses for the formation of reserves of Binbank Credit Cards JSC acquired last year.
A positive factor - the regulatory capital of Binbank is supported by a subordinated loan of 12.7 billion rubles. As of April 1, 2015, the organization's capital adequacy ratio was 13.2%, which is significantly higher than the minimum level of 10% established by the regulatory body.