Russia's third-largest bank largely state-controlled Gazprombank in Jan- Sep 2013 increased its IFRS net profit by 19.3% y/y to RUB 24bn , the bank has announced. To compare, in H1/13 bank's net profit grew by 17%. In Q3, the bank made RUB 11.6bn net profit, attributed to operational profit from main activities that compensated the losses on securities in H1. Bank's corporate loan portfolio increased by 20.7% y/y to RUB 1 .9tn. Retail loans expanded by 28.6% y/y to RUB 270.5bn . Share of overdue loans inched down to 1%. Bank's Basel II first-tier capital sufficiency was 10.1% as of end of September 2013 vs. 11% as of end of 2012. Overall capital ratio was 14% vs. 13.9% as of end of 2012, due to the issue of subordinated Eurobonds worth RUB 39.2bn in Q3/13. Fitch Ratings recently assigned a long-term foreign and national currency Issuers Default Rating (IDR) of BBB-, short-term foreign currency rating of F3, and national scale rating of AA+(rus) to Gazprombank , outlook Stable. Long-term IDR reflects high probability of support from Russian Federation (BBB/Stable) or other state-controlled structures, primarily Gazprom (BBB/Stable) that founded the bank and remains its minority shareholder. Fitch supports this with history of receiving such support, high ownership share of quasi-state structures, systemic importance for the banking sector, and reputational risks for the sovereign issuers in case of Gazprombank's problems. At the same time Fitch attributes one-notch difference with Russia's sovereign rating to complicated ownership structure, lower systemic importance than Sberbank and VTB Bank , and absence of clearly defined role in state policies (such as that of development bank VneshEkonomBank and agricultural bank RosSelkhozBank). A decrease in the quasi-state ownership or weaker ties of the bank with in the bank would lead to downgrading Gazprombank's rating.
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