Fitch ups Alfa Bank

Fitch Ratings said it upgraded Alfa Bank's long-term issuer default rating to BB+ from BB and assigned a stable outlook. Fitch affirmed MDM Bank OJSC's issuer default rating at BB with a stable outlook

The upgrade of Alfa Bank's issuer default rating reflects significant asset quality improvement, which coupled with a good quality customer franchise and relatively cheap funding costs creates momentum for sustainable future growth, the agency said.

The upgrade also reflects sound performance and good liquidity management through the cycle as well as the successful track record through several crises and provision of support from shareholders in difficult times, the agency added.

The affirmation of MDM's ratings reflects Fitch's base-case expectation that the bank should be able to gradually recover after significant asset quality deterioration, reflected in still high non-performing loans (14% of end-2010 loans), restructured loans (9%) and foreclosed properties (equivalent to 4%), the agency noted.

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