Premier Bank receives 'b1' rating from Moody's

International credit rating agency Moody's Investors Service has assigned Premier Bank Limited with "B1" long term rating on 17 November, based on the financials of year 2021.

Moody's has observed that the bank's financial outlook is stable, reflecting its credit fundamentals will remain stable over the next 12 to 18 months, said a press release.

The bank's B1 long-term deposit and issuer rating reflect its stable but modest asset quality, with modest capitalisation and profitability. The rating also reflects the bank's reliance on high cost deposits because of its small deposit franchise, balanced by good liquidity.

As per Moody's, the bank's profitability is modest because of its modest net interest margin, with its return on tangible assets 0.7% in 2021. This is partially compensated by good fees and commission income, as well as moderate credit costs.

Its capital is modest, with tangible common equity (TCE) to Moody's-adjusted risk weighted assets (RWA) at 7.5% in 2021, lower than the 9.5% asset weighted average of Moody's rated domestic peers. Moody's expects the bank's capital to remain modest because its RWA growth will outpace internal capital growth.

Moody's observed that the bank's liquidity is adequate, with liquid banking assets at 23% of tangible banking assets in 2021, which consist mostly of better quality cash and Government securities.

According to the media release, corporate governance is a key credit consideration for the bank's rating. The bank's modest financial strategy and risk management are reflected in its asset quality and capital levels.