The bank and the holding's short-term, individual, and support ratings were confirmed at previous levels.
The upgrade is due to substantial improvements in the bank's corporate management and risk management procedures, and the reduced concentration and volume of operations with affiliates, the agency said. The long-term, national long-term, short-term, and individual ratings also take into account the bank's careful approach to risk, sufficient liquidity, stable profitability from its main operations, high-quality assets, and good capitalization.
Negative factors are potential volatility in the bank's revenue due to its securities operations, and substantial risks taken on from affiliates (although such risks are limited to 10% of total assets).
Fitch analysts said the ratings might go up in the future if the bank improved profitability, continued to reduce the volume of operations with affiliates, strengthened risk and corporate management procedures, and continued to diversify operations and its client base.
A drop in the ratings would be caused by a substantial worsening in the quality of assets, which would push capitalization down and reduce profits.
MDM Holding GmbH is the MDM banking group's holding company. MDM Bank, one of the 30 largest banks in Russia in terms of assets, is the major element of the group.
