August 8, 2014 at the meeting of the Rating committee it has been decided to confirm a long-term credit rating of PJSC «ALFA-BANK» (23494714) at the level uaAA+ according to the national Ukrainian scale. Bank or separate bond instrument with rating uaAA+ is characterized by a very high solvency compared to other Ukrainian borrowers or bond instruments. Summarizing the results of the Bank's activities in the first half of 2014, the Agency was guided by the following key conclusions:

 

             1. According to the results of the H1 of 2014 key balance sheet indicators of PJSC «ALFA-BANK» have demonstrated positive dynamics:

• Shareholders’ equity of the Bank has increased by 0,03% and has amounted to UAH 4,2 bn;
• Liabilities of PJSC «ALFA-BANK» have grown by 23,73% or by UAH 5,96 bn;
• Assets of the Bank have grown by 20,33% or by 5,96 bn and have amounted to UAH 35,26 bn;
• Customer credits and debt of the Bank including reserves have grown by 17,73% or by UAH 3,9 bn – up to UAH 25,9 bn.

Table 1

Key balance sheet indicators of PJSC «ALFA-BANK» according to the results of the H1 of 2014

th. UAH, %, p.p.

Indicators	01.07.2014	01.01.2014	Change	Growth rate, %
Shareholders’ equity	4 199 863	4 198 789	1074	0,03%
Authorized capital	4 639 121	4 639 121	0	-
Shareholders’ equity/Assets ratio, %	11,91%	14,33%	-2,42 p.p.	-
Total liabilities	31 059 674	25 103 457	5 956 217	23,73%
Including liabilities in foreign currency	21 580 949	16 342 938	5 238 011	32,05%
Funds of banks	5 416 607	4 607 800	808 807	17,55%
Funds of individuals	10 093 325	9258256	835 069	9,02%
Funds of legal entities	6 752 858	6 579 432	173 426	2,64%
Total assets	35 259 537	29 302 246	5 957 291	20,33%
Liquid assets (Cash and cash equivalents + Funds of obligatory reserves in NBU + Funds in other banks)	7 951 869	6 184 819	1 767 050	28,57%
Customer credits and debt including reserves	25 910 557	22 008 944	3 901 613	17,73%
Loan provisions	3 005 190	1 784 135	1 221 055	68,44%
Loan provisions/ customer credits and debt ratio, %	11,60%	8,11%	3,49 p.p.	-
Securities for sale	1 273 919	990 955	282 964	28,55%
Liquid assets/Liabilities ratio, %	25,60%	24,64%	0,96 p.p.	-

Source: data of PJSC «ALFA-BANK», calculations by RA «Expert-Rating»

            Key components of the resource base of PJSC «ALFA-BANK» in the period from 01.01.2014 to 01.07.2014 have shown the following values:

• Funds of individuals have increased by 9,02% (in the whole on the banking system have decreased by 3,03%);
• Funds of legal entities have grown by 2,64% (in the whole on the banking system have increased by 0,42%);
• Funds of banks have increased by 17,55%.

The above statistics indicates that in the first half of 2014 PJSC «ALFA-BANK» has been out of the tendency of the outflow of funds of individuals in hryvnia equivalent. 

 

            2. In the period from 01.01.2014 to 01.07.2014 the equity norms of PJSC «ALFA-BANK» (N1, N2 and N3) have demonstrated a multidirectional dynamics:

• The regulatory capital of the Bank (N1) has increased by 14,92% (in the first quarter there was fixed a growth rate of 6,35%); 
• The norm of regulatory capital adequacy (N2) has decreased by 1,59 p.p. (in the first quarter the decrease amounted to 0,66 p.p.);
• The norm of the ratio of regulatory capital to total assets (N3) has reduced by 1,15 p.p. (in the first quarter the decrease amounted to 2,19 p.p.), i.e. in the second quarter the value of N3 has been improved.

Despite a decrease of N2 and N3, its values have been complied not only with a great reserve with respect to the limits, set by NBU, but also have been higher than the averages of these norms on the banking system.

Table 2

Key norms of PJSC «ALFA-BANK» according to the results of the H1 of 2014

th. UAH, %, p.p.

Norms	The norm set by NBU	01.07.2014		01.01.2014		Change, th. UAH, p.p.
		The Bank’s norm	The average of the system	The Bank’s norm	The average of the system
Regulatory capital (N1), th. UAH	Not less than UAH 120 000 th.	5 885 284	-	5 121 222	-	764 062
Regulatory capital adequacy (N2), %	Not less 10%	17,42%	15,87%	19,01%	18,26%	-1,59 p.p.
Regulatory capital/Total assets ratio (N3), %	Not less 9%	15,36%	12,56%	16,51%	13,98%	-1,15 p.p.
Instant liquidity (N4), %	Not less 20%	168,89%	48,50%	177,92%	56,99%	-9,03 p.p.
Current liquidity (N5), %	Not less 40%	164,13%	78,71%	148,70%	80,86%	15,43 p.p.
Short-term liquidity (N6), %	Not less 60%	85,14%	85,16%	79,89%	89,11%	5,25 p.p.
Norm of large loan risks (N8), %	Not more 800%	207,58%	243,58%	219,64%	172,05%	-12,06 p.p.
Norm of the maximum amount of loans, guarantees and sureties, issued to the insiders (N10), %	Not more 30%	0,56%	1,54%	1,78%	1,63%	-1,22 p.p.

Source: data of PJSC «ALFA-BANK», NBU, calculations by RA «Expert-Rating»

 

             The liquidity norms of PJSC «ALFA-BANK» in the first half of 2014 have shown a multidirectional dynamics, but have remained rather better, than in the average on the system:

• Instant liquidity norm of the Bank (N4) has decreased by 9,03 p.p. down to 168,89% with the average value 48,5% on the system;
• Current liquidity norm (N5) has continued its growth and has increased by 15,43 p.p. up to 164,13% with the average value 78,71% on the system;
• Short-term liquidity norm of the Bank (N6) has grown by 5,25 p.p. up to 85,14% with the average value 85,16% on the system.

Therefore, on 01.07.2014 PJSC «ALFA-BANK» has formed a sufficient reserve of instant, current and short-term liquidity, and N4 and N5 of the Bank have exceeded the averages in several times. N6 fo the Bank has been fixed almost at the average level of the market.

 

 3. According to the results of the H1 of 2014 PJSC «ALFA-BANK» has received net profit in the amount of UAH 3,9 mln that is by 55,81% less than in the same period of 2013. The Agency gives a positive assessment to the fact of the Bank’s profitable activity in the period difficult for economics of Ukraine.

Table 3

Separate indicators of income and expenses of PJSC «ALFA-BANK»

th. UAH, %, p.p.

Indicators	HI of 2014	HI of 2013	Change	Growth rate, %
Net interest income	837 428	770 461	66 967	8,69%
Net commission income	286 705	222 443	64 262	28,89%
Net commission income/ Net interest income ratio	34,24%	28,87%	5,37 p.p.	-
Result from operations with securities in the trading portfolio of the bank	457 460	251	457 209	-
Result from operations with foreign currency	19 243	44 142	-24 899	-56,41%
Administrative and other operating expenses	824 699	674 698	150 001	22,23%
Net profit	3 900	8 826	-4 926	-55,81%
ROE, %	0,09%	0,21%	-0,12 p.p.	-

Source: data of PJSC «ALFA-BANK», calculations by RA «Expert-Rating»

 

The Agency also draws attention that in the H1 of 2014 the Bank has increased loan provisions and funds in other banks by UAH 1,33 bn and has decreased the result from operations with foreign currency by UAH 24,9 mln compared to the same period of 2013. Probably, these factors have become the reasons for the decrease in net profit of the Bank in the Q1 of 2014. It should pay attention to the increase in net interest income of PJSC «ALFA-BANK» by UAH 66,97 mln or by 8,69% in the H1 of 2014, as well as the increase in net commission income by UAH 64,26 mln or by 28,89%. Such positive dynamics indicates a growing potential of profitability of the Bank’s operations under favorable market conditions.

Therefore, PJSC «ALFA-BANK» has entered the second half of 2014 with a sufficient reserve of equity and liquidity, its activity has remained profitable. At the same time, in the first half of 2014 the growth rates of funds of legal entities of the Bank in hryvnia equivalent have been higher, than on the banking system of Ukraine, and the growth of finds of individuals of the Bank in hryvnia equivalent has occurred against the background of the outflow from the banking system. These factors have provided the basis for the Agency’s decision to confirm the long-term credit rating of the Bank at a very high level.

Confirmation of the credit rating of PJSC «ALFA-BANK» - 08.08.2014 (english version)