International credit rating agency Moody’s Investors Service has assigned The Premier Bank Limited with B1 long term rating recently, based on the financials of year 2021.
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, said a press release.
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.
The bank’s capital is modest, with tangible common equity (TCE) to Moody’s-adjusted risk weighted assets (RWA) at 7.5 percent in 2021, lower than the 9.5 percent 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.