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RA «Expert-Rating» confirms the credit rating of VAB Bank at the level uaAA according to the results of the 9 months of 2011


18/11/2011

RA «Expert-Rating» confirms the credit rating of VAB Bank at the level uaAA according to the results of the 9 months of 2011

November 18, 2011 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 Bank’s activity for the 9 months of 2011 (see table).

Table

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

Indicator

9 months of 2011 (01.10.2011)

9 months of 2010 (01.10.2010)

Change, th. UAH, p.p.

Growth rate, %

Total assets

8 698 442

6 785 391

1 913 051

28,19

Cash and cash equivalents

1 127 743

747 888

379 855

50,79

Customer credits and debt

6 660 049

5 922 679

737 370

12,45

Loans provisions

(1 435 147)

(1 071 998)

363 149

33,88

Total liabilities

8 170 538

6 190 326

1 980 212

31,99

Due to other banks

960 145

1 138 608

(178 463)

(15,67)

Funds of legal entities

1 239 012

1 009 877

229 135

22,69

Funds of individuals

4 202 896

2 824 901

1 377 995

48,78

Shareholders’ equity

527 904

595 065

(67 161)

(11,29)

Net interest income

94 698

44 460

50 238

113,00

Net profit (loss)

(301 872)

(298 261)

3 611

1,21

Loans provisions/ Loan portfolio RATIO

21,55 %

18,10 %

(3,45 p.p.)

-

Capital adequacy (Н2)

16,02 %

15,21 %

(0,81 p.p.)

-

ROE

(57,18 %)

(50,12 %)

(7,06 p.p.)

-

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 28,19% or by UAH 1,9 bn. for the period from 01.10.2010 to 01.10.2011 and have constituted UAH 8,7 bn. High liquid assets of the Bank have grown by 50,79% and have constituted UAH 1,13 bn. as of 01.10.2011. Bank’s loan portfolio has reached UAH 6,7 bn. according to the results of Q3 of 2011 that is by 12,45% more than according to the same period of previous year. Loan provisions have grown by 33,88% and Loan provisions/ Loan portfolio ratio has constituted 21,55% with an average indicator of the banking system – 19,04%. According to the Agency, the decline in the Bank’s loan portfolio quality is caused by the long-term activity of the financial institution in financial and economic crisis – the activity of most lenders haven’t stabilized yet after the crisis, which results in the rise of problem debts and in the necessity of forming reserves for them. The Bank takes all the measures of decreasing the problem debts, including carries out the loan restructure and implements active claim work. The Agency thinks that bank’s shareholders have sufficient resources in order to provide the stable functioning of the financial institution.

2. Bank’s liabilities have increased by UAH 1,98 bn. or by 31,99% for the 12 months and have constituted UAH 8,2 bn. according to the Q3 of 2011. Dynamics of key components of the Bank’s resource base has looked as follows: funds of individuals have increased by 48,78% or by UAH 1,38 bn. and have reached UAH 4,2 bn., the growth of funds of legal entities has constituted 22,69%, at the same time, funds raised from other banks have reduced by 15,67%.

3. The Bank has succeeded to increase net interest income more than in twice (113%) during the analyzed period, while the average growth rate of this indicator of the banking system has constituted only 5,57%. However, due to the further increase in loan provisions according to the results of 2011 the Bank remains showing loss, which equals to UAH 301,9 mln. as of 01.10.2011. Such a situation is still typical for most financial institutions of Ukraine; total financial result from banking activity is negative as of 01.10.2011.

            As a whole, analysis of VAB Bank’s activity indicates its dynamic development according to the results of Q3. Assets and liabilities have grown rapidly, liquid assets have increased in 1,5 times, the Bank has succeeded to increase net interest income in twice that will positively impact on its profitability indicator. Regulative capital of the Bank fully covers the risks, which occur during its activity (including risks related to the rise of problem debts and losses). The Bank fulfills the capital norms with a significant excess of established requirements. Thus, as of 01.10.2011 regulative capital of the Bank has constituted UAH 1,4 bn., adequacy norm (H2) – 16,02% (with a norm not <10%), norm of regulative capital/ total assets ratio (H3) – 13,45% (with a norm not <9%).

Analytical department of RA «Expert-Rating»

Full version of confirmation (english version) - 18.11.2011

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