PRESS-RELEASE

(Translation from Russian)

RA «Expert-Rating» confirms the credit rating of VAB Bank at the level uaAA according to the results of 2011

March 22, 2012 RA «Expert-Rating» confirms the credit rating of VAB Bank at the level uaAA according to the national scale. When confirming the credit rating, the Agency was guided by the results of the Bank’s activity for 2011 (see table).

Table

Key performance indicators of VAB Bank (th. UAH, %)

Source: NBU data, calculations by RA «Expert-Rating»

When confirming the rating, the Agency was based on the following conclusions:

1. Bank’s assets have increased by 37,02% or by UAH 2,5 bn for the 2011 and as of 01.01.2012 they have reached UAH 9,1 bn. Cash and cash equivalents have hardly changed and have amounted to UAH 1,2 bn following the results of 2011, representing 12,9% of Bank’s assets. Bank’s loan portfolio has grown by 17,56% or by UAH 960,9 mln and on 01.01.2012 it has equaled to UAH 6,4 bn, while the average growth rate of loans, provided by the banks of Ukraine, has amounted to 8,44% for the same period. At the same time, the growth of loan provisions, formed by the Bank, has slightly exceeded the dynamics of lending. Thus, its volume has increased by 21,89% or by UAH 268,3 mln for the 2011 and as of 01.01.2012 it has reached UAH 1,5 bn that covers 23,22% of the Bank’s loan portfolio.

2. As of 01.01.2012 Bank’s liabilities have amounted to UAH 8,8 bn. Thus, in 2011 their volume has increased by 37,82% or by UAH 2,4 bn, while the average growth rate of this indicator of the Ukrainian banking system has amounted to 11,74% for the same period. Commitments to other banks have rapidly grown (more than in 5 times or by 424,64%), as a result, their volume has reached UAH 1,6 bn on the reporting date, and its proportion in total liabilities of the Bank has increased by 13,29 p.p.: from 4,73% as of 01.01.2011 up to 18,02% as of 01.01.2012. Proportion growth of commitments to other banks indicates the increase of confidence in VAB Bank in the interbank market. Funds of individuals have increased by 40,52% or by UAH 1,3 bn for the analyzed period and as of the beginning of 2012 they have amounted to UAH 4,3 bn that occupies 49,44% of total funds raised by the Bank. At the same time, funds of legal entities have reduced by 13,82% and according to the results of 2011 they have amounted to UAH 1,1 bn or 12,36% of Bank’s liabilities. Therefore, the analysis of the above indicators shows the improvement in diversification of the Bank’s resource base and allows to evaluate its level as acceptable as a whole as of the last reporting date. 

3. Net interest income, generated by the Bank, has increased almost in twice (in 1,9 times or by 91,53%) for the 2011 in comparison with the 2010 and as of 01.01.2012 it has amounted to UAH 116,8 mln. Growth of net interest income has been positively affected by positive dynamics of increasing assets by the Bank, including the increase of lending. Nevertheless, according to the results of 2011, the Bank has demonstrated loss of UAH 497,4 mln, which is by 19,95% or by UAH 123,9 mln less, than according to the results of 2010. Financial result of the Bank has been impacted by a still rising dynamics of growth of loan provisions. But it should be taken into account that the same process of forming the reserves has been observed in other large banks of Ukraine, which were active participants of the lending market before the crisis, significantly increased their loan portfolio and at the present moment they have to direct significant financial resources into reserves.

4. Shareholders’ equity of the Bank has amounted to UAH 332,4 mln as of 01.01.2012, that is by 18,81% or by UAH 52,6 mln more, than as of 01.01.2011. At the same time, the Shareholders’ equity/ Assets ratio has reduced just by 0,56 p.p. in the analyzed period and as of 01.01.2012 this ratio has equaled to 3,64%. The Agency pays attention to the decrease in capital adequacy that, against the background of losses, remains to be one of a few negative factors, which restrains the credit rating of VAB Bank.

            As a whole, analysis of key performance indicators of VAB Bank in 2011 demonstrates good dynamics of its development. In 2011 the Bank has actively increased assets and resource base, whose growth rates have exceeded the average market indicators. The result of positive dynamics of asset growth, including loans, as well as of the deliberate policy of asset and liability management, has become high growth rate of net interest income, which has increased almost in twice, while its average growth on the banking system of Ukraine has amounted to 3,7%. Bank has succeeded to improve diversification of its resource base during the analyzed period, including due to raising funds in the interbank market that indicates an increase of confidence in the Bank from the counterparty banks. At the same time, due to a need of maintaining loan provisions at a sufficient high level, the Bank hasn’t managed to conduct profitable activity according to the results of 2011. But there are all the prerequisites for that the Bank will be able to reach the break-even level in 2012. 

It should be noted the fact that in March of 2012 the Bank has registered the share issue for UAH 600 mln, which has resulted in the increase of authorized fund of the Bank by 48%, up to UAH 1,8 bn. The meeting of the Bank’s shareholders is planned for 30 March of 2012, where the question about the increase of the Bank’s authorized fund by UAH 500 mln will be discussed. That confirms the intention of Bank’s shareholders to provide the financial institution with active support in future that enables to focus the strategy of the Bank’s development on strengthening its market positions.

Analytical service of RA «Expert-Rating»

Confirmation of VAB Bank (english version) - 22.03.2012