International credit rating agency Moody’s Investors Service has assigned The Premier Bank Limited with B1 long term rating on November 17, 2022, based on the financials of year 2021, a press release said Tuesday.
Moody’s has observed that the Bank’s financial outlook is stable, reflecting the Bank’s credit fundamentals will be stable over the next 12 to 18 months.
The Bank’s B1 long-term deposit and issuer rating reflect its stable but modest asset quality, with modest capitalization 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 percent in 2021. This is partially compensated by good fees and commission income, as well as moderate credit costs.
The bank’s 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 percent of tangible banking assets in 2021, which consist mostly of better quality cash and government securities.
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.
