PRESS RELEASE
RA Expert Rating confirms the credit rating of VAB Bank at the
level uaAA following the results of the 1 half of 2011

September, 07th, 2011 RA Expert Rating confirms credit rating of ‘VAB Bank’ according to the national scale at the level uaAA. This level of credit rating indicates a very high reliability of Bank in the long term period. (see table)

Confirming the credit rating of VAB Bank, the Agency was guided by the following conclusions:
1. The Bank assets exceed UAH 7,7 bln. as of 01.07.2011 due to the growth rate (8,72%) over the last 12 months in comparison to the same period of last year. During the analyzed period the Bank has also demonstrated a positive dynamics in the volume of credit portfolio which has increased by UAH 430,1 mln. or by 7,27%. The liquid assets have decreased on 22,45% that, in the Agency’s opinion, is caused by the further process of increasing the Bank's credit portfolio. Thus, the Bank has reduced the level of surplus liquidity and has increased the volume of profitable assets that will have a positive impact on the financial result in future. The volume of Bank’s loans provisions has increased in 1,5 times over the last 12 months and as of 01.07.2011 has made UAH 1,35 bln. or 21,24% of credit portfolio. The rise in reserves indirectly indicates the deterioration in quality of credit portfolio, but it also shows that the Bank realistically appreciates its credit risks and accordingly generates provisions for credit risks.
2. There has been an increase in Bank’s total liabilities, which has constituted 7,38% along with the rise of assets. Funds of individuals traditionally have shown the greatest growth rate which is equal to UAH 1,17 bln. or 46,79%. The volume of funds of legal entities has increased by 32,04% or by UAH 332,1 mln. At the same time there has been a further reduction in VAB Bank’s liabilities to other banks, which has constituted 32,22% according to the results of the Q2 of 2011 in comparison to the Q2 of 2010. It should be noted that the proportion of liabilities to other banks in total liabilities of VAB Bank is 12% at the end of Q2 of 2011.

3. The unprofitability of VAB Bank’s operations has continued reducing in the 1 half of 2011. The volume of Bank’s net loss has made UAH 158,3 mln. according to the results of Q2 of 2011, that is by 22,62% less than in the same period of 2010. The rise of net interest income, which has constituted 174,11%, has contributed the decrease of Bank’s loss. The positive factor is an increase of Bank’s equity by 25,11% or by UAH 134,8 mln. during the analyzed period. This increase has been caused by the contributions of shareholders. The rise of shareholder’s equity has contributed the growth of capital adequacy (Equity/Assets ratio) on 1,14 p.p., which is equal to 8,68% as of 01.07.2011. The Agency reminds that additionally the shareholders of VAB Bank have decided to place the new issue of shares and to increase the share capital by UAH 600 mln. At present time the shares are fully placed and paid.
Thus, the results of the VAB Bank’s activity have demonstrated in general a positive dynamics in the 1 half of 2011 in comparison to the same period of 2010. Despite the fact that the Bank continues to show losses, their volume is declining. The Bank takes an active role in the lending market of individuals and legal entities that should lead the profitability indicators of its activity in positive dynamics. In plus, the Bank continues to increase its equity that certainly has a positive impact on its solvency and indicates the willingness of shareholders to provide the resources necessary to Bank.

Analytical department of RA Expert-Rating

Rating confirmation of ‘VAB Bank’ (full version)