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RA Expert Rating confirms the credit rating of VAB Bank (USREO code 19017842) at the level uaAA following the year 2010 and believes that the change o


10/03/2011

As of March, 10th, 2011 the RA Expert Rating confirmed the credit rating of VAB Bank (USREO code 19017842) at the level uaAA according to the national scale. The given level means very high reliability of the bank in the long-term period.

Confirming VAB Bank rating, the Agency was guided by the following conclusions:
1. As of 1/1/2011, Bank assets have made 6,7 bn. UAH, that is on 9,05 % less than in the similar period of last year. The total amount of Bank liabilities also has slightly decreased and has made 6,4 bn. UAH. The process of Bank liabilities structure reformatting should be noted which was expressed in replacement of the resources involved from other banks (at the beginning of 2011 these resources decreased by 88,62 %) by the funds of natural and legal persons, which increased by 60,14 and 26,45% accordingly. The bank began to rely more upon market sources of resources that proves to the strengthening of its market positions. Also the Agency draws attention to that as of 1/1/2010 the shareholders equity of the Bank decreased to 62,15 % in comparison with the similar indicator of the last year. However in December, 2010 the shareholders of the Bank have approved the results of issue of Bank shares for the amount of 550 m UAH (70 m US $), and in January 2011 the Bank has registered a corresponding increase in authorized capital stock. The loan portfolio of the Bank reduced to 11,13%, provisions of loans impairment grew by 63,01 % and as of 1/1/2011 have made 1,2 bn. UAH.
2. In 2010 the net interest income of the Bank dropped by 79,65 %: from 299,6 m UAH to 60,9 m UAH. As a result the Bank has ended the year 2010 at a loss of 621,4 m UAH and a negative profitability of the equity - 222,09 %. RA ‘Expert Rating’ estimates the size of the loss incurred by the Bank as substantial. Let it be reminded that VAB Bank has ended the year 2009 at the loss of 15 m UAH, that is almost 2 times lower than loss of 2010. According to the Agency, the unprofitable work of the Bank can be caused not only by reduction of percentage margin and portfolio impairment, but also by the fall of interest rates. The indicator of regulative capital adequacy (capital/assets ratio weighed on risk) has increased by 0,74 p.p. and as of 1/1/2011 has made 19,25 %.
3. VAB Bank showed an essential gain of liquidity. The volume of liquid assets has grown on 68 % from the 1/1/2010 to the 1/1/2011, and Bank liabilities decreased by 3 %. As a result the liquid assets/liabilities ratio has grown from 10 to 18 % (during the period from 1/1/2010 to 1/1/2011). The bank was affected by the general trend of maintaining the redundant liquidity, that badly affected the size of net interest income, but improved Bank’s short-term period solvency.
4. On January, 27th, 2011 the key shareholder of the Bank Kardan N.V. spread a notice on reduction of its share in the capital of VAB Bank. After studying the situation around the change of shareholders the analytical service of the Agency may assert that change of the structure of VAB Bank shareholders will in no way affect its level of credit rating in the near future. The Agency expresses confidence in that the new shareholders of the Bank will be able to carry out more aggressive credit policy and in the near future will restore the profitability of Bank’s work.

Analytical service of RA ‘Expert-Rating’

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