Based on the key performance indicators of credit institutions cited in public reports, it is possible to assess with a certain degree of reliability how profitable and safe cooperation with them will be. But it is important to take into account the opinion of experts. One of the most popular sources of objective information about the creditworthiness and financial stability of banks is the annual rating of banks' reliability published by the reputable financial and economic magazine Forbes.
The reliability rating of investment companies and banking organizations is an indicator of their ability to meet financial obligations. Credit ratings assess stability, existing risks and the likelihood that the bank will not be closed.
Rating criteria and methodologies
The ranking of credit institutions is based on two criteria:
- Evaluation by experts of the bank's performance on the basis of published reports.
- Analysis of bank stability indicators according to the data of international and domestic rating agencies.
The financial results of banks' activities are assessed based on various indicators: the size of assets, profit dynamics, capital adequacy, loans issued, volume of deposits, etc. In this case, the key in comparison is the assessment of assets. All sorts of rankings are compiled from the ranking for a variety of specific statistical indicators.
The bank's stability indicator is determined according to rating criteria and methodologies of international and Russian rating agencies: Standard & Poor’s, Moody’s Investors Service, Fitch Ratings, RAEX, ACRA. If a credit institution has several ratings, the maximum is taken into account. The bank's lack of an assessment given by the experts of these agencies does not mean that it is unreliable, but significantly affects its reputation.
To reflect the results of the rating, a certain scale was adopted, consisting of combinations of letters A, B, C, D. Added to the letters "plus" and "minus" signs are used to grade intermediate marks. In this case, the ratings can be supplemented with the mark “under control” or “bank under sanctions”. A forecast is also published showing a possible change in the rating over the next year. Forecast options: positive, stable, developing, negative.
However, the assignment of a rating to a bank should not be considered as a guarantee of the accuracy, completeness and timeliness of the information on which the expert opinion is based. Also, one cannot assume that the bank's position in the rating will give a 100% probability that the expected result from the use of such information will coincide with the actual one. None of the ratings is the basis for unambiguous conclusions about the reliability of a particular bank. This is an evaluative expert opinion, and nothing more.
Forbes authoritative opinion
The popular economic magazine Forbes annually evaluates the 100 largest and most significant banks operating in Russia in terms of the likelihood of their default.
The main rating criteria for the selection of banks for participation in the compilation of the list of Forbes analysts this year took three parameters:
- The presence and number of ratings.
- The amount of assets is over 10 billion rubles.
- The share of individuals' deposits in liabilities is over 3%.
All participants were ranked according to ratings, asset size and risk assessment, in 5 reliability groups on the Fitch scale.
The first group includes the 13 most reliable banks with ratings BBB- and BB +, which are assessed as quite creditworthy. The second group consists of banks with ratings BB and BB-. These are 19 quite reliable credit organizations, which, in the event of a deteriorating economic situation, have the opportunity to attract alternative financial resources to fulfill their obligations.16 banks of the third group with a B + rating should rely only on their own strength in case of problems, but in case of default they will be able to return their investments to creditors during the sale of assets. In terms of reliability, banks from the fourth and fifth groups (ratings B and B- respectively) are not inferior to the two previous groups, however, when the business environment changes, their risks are slightly higher.
It would be wrong to believe that a bank that has not entered the TOP-10 in terms of reliability is not stable. Usually, the 100 most stable banks are identified and this reliability rating is divided into several categories. As a general rule, banks of the first and second categories of reliability, as well as of group B, can be regarded as stable banks. But banks that are not included in the hundred should be treated with great caution.
