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Rating of PJSC «ALFA-BANK» is updated


24/02/2015

On February 24, 2015 at the meeting of the Rating committee of RA “Expert-Rating” it was decided to confirm the long-term national Ukrainian scale rating of PJSC «ALFA-BANK» (23494714) at the level uaAAA. Bank or separate bond instrument with rating uaAAA is characterized by the highest solvency compared to other Ukrainian borrowers or bond instruments.

At the same time, at the meeting of the Rating committee it was decided to affirm a long-term credit rating to the bonds of PJSC «ALFA-BANK» Series M, N, O, P at the level uaAAA. Bonds of the above mentioned Series were registered by NSSMC in October of 2014 for the total amount of UAH 3 bln.

Making decision to confirm the rating, the Agency was guided by the results of the Bank’s activity for the 2014, as well as by the conclusions drawn from the analysis of financial and statistical statements of the Bank for the IV quarter of 2014 and for January of 2015.

             1. In 2014, key balance sheet indicators of PJSC «ALFA-BANK» have demonstrated multidirectional dynamics:

  • Total equity of the Bank has decreased by 16.41%;
  • Total liabilities of PJSC «ALFA-BANK» grew by 32.19%;
  • Total assets of the Bank increased by 25.23%;
  • Gross loans and advances to customers of the Bank expanded by 34.08%.

Table 1

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

UAH ths, %, p.p.

Indicators

01.01.2015

01.01.2014

Change

Growth rate, %

Total equity

3,509,689

4,198,789

-689,100

-16.41%

Share capital

4,639,121

4,639,121

0

0.00%

Total equity/Total assets ratio, %

9.56%

14.33%

-4.76 p.p.

-

Total liabilities

33,184,225

25,103,457

8,080,768

32.19%

Including liabilities in foreign currency

23,216,751

16,342,938

6,873,813

42.06%

Due to banks

5,121,681

4,607,800

513,881

11.15%

Due to individuals

10,516,269

9,258,256

1,258,013

13.59%

Due to legal entities

7,544,561

6,579,432

965,129

14.67%

Total assets

36,693,914

29,302,246

7,391,668

25.23%

Liquid assets (Cash and cash equivalents + Mandatory reserves with NBU + Trading securities + Due from other banks)

5,661,860

6,184,819

-522,959

-8.46%

Gross loans and advances to customers

29,508,788

22,008,944

7,499,844

34.08%

Provision for loan impairment

3,899,605

1,784,135

2,115,470

118.57%

Provision for loan impairment/Gross loans and advances to customers ratio, %

13.22%

8.11%

5.11 p.p.

-

Securities available for sale

911,975

990,955

-78,980

-7.97%

Liquid assets/Liabilities ratio, %

17.06%

24.64%

-7.58 p.p.

-

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

            In 2014, key components of the resource base of PJSC «ALFA-BANK» in hryvnia terms changed as follows:

  • Due to individuals increased by 13.59%;
  • Due to legal entities decreased by 14.67%;
  • Due to banks grew by 11.15%. 

            The above mentioned statistics indicate that in a highly unstable for the banking system of Ukraine period PJSC «ALFA-BANK» has managed to maintain the level of lending activity and to provide the increase in the key resource base components in hryvnia terms.

            2. In 2014, the capitalization normative indicators of PJSC «ALFA-BANK» (N1 and N2) have demonstrated multidirectional dynamics:

  • Regulatory capital of the Bank (N1) has increased by 20.75% (for the 9 months of 2014 N1 has grown by 8.33%);
  • Normative indicator of the regulatory capital adequacy (N2) has decreased by 2.37 p.p. 

The Agency focuses on the fact that for the IV quarter of 2014 the Bank has improved the normative indicator of the regulatory capital adequacy: N2 of the Bank has grown from 15.77% up to 16.64%. Also as of 01.01.2015 N2 of the Bank has been higher than the average on the market by 1.04 p.p. that implies a good provision of the Bank with regulatory capital.

Table 2

Key normative indicators of PJSC «ALFA-BANK» according to the results of 2014

UAH ths, %, p.p.

Normative indicators

The normative value limit set by NBU

01.01.2015

01.01.2014

Change,  UAH ths, p.p.

The Bank’s normative value

The average of the system

The Bank’s normative value

The average of the system

Regulatory capital (N1), UAH ths

Not less than UAH 120,000 ths

6,184,229

-

5,121,222

-

1,063,007

Regulatory capital adequacy ratio (N2), %

Not less 10%

16.64%

15.60%

19.01%

18.26%

-2.37 p.p.

Instant liquidity ratio (N4), %

Not less 20%

105.16%

57.13%

177.92%

56.99%

-72.76 p.p.

Current liquidity ratio (N5), %

Not less 40%

89.04%

79.91%

148.70%

80.86%

-59.66 p.p.

Short-term liquidity ratio (N6), %

Not less 60%

83.74%

86.14%

79.89%

89.11%

3.85 p.p.

Normative indicator of large loan risks (N8), %

Not more 800%

217.79%

250.04%

219.64%

172.05%

-1.85 p.p.

Normative indicator of the maximum amount of loans, guarantees and sureties issued to the insiders (N10), %

Not more 30%

0.34%

1.37%

1.78%

1.63%

-1.44 p.p.

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

             The liquidity normative indicators of PJSC «ALFA-BANK» have shown multidirectional dynamics, but at the same time the Bank has kept a significant reserve of the liquidity normative indicators:

  • Instant liquidity ratio normative indicator of the Bank (N4) has decreased by 72.76 p.p. down to 105.16%, with the system’s average of 57.13%;
  • Current liquidity ratio normative indicator (N5) has decreased by 59.66 p.p. down to 89.04%, with the system’s average of 79.91%;
  • Short-term liquidity ratio normative indicator of the Bank (N6) has grown by 3.85 p.p. up to 83.74%, with the system’s average of 86.14%. 

Normative indicators N4 and N5 have noticeably decreased, but on 01.01.2015 have been higher than the market averages. Therefore, on 01.01.2015 PJSC «ALFA-BANK» has continued to maintain a sufficient reserve of instant and current liquidity, as well as a noticeable reserve of short-term liquidity.

 3. In 2014, PJSC «ALFA-BANK» has received a loss of UAH 744.050 mln as compared to a profit of UAH 13.113 mln in 2013. The Agency considers that the Bank’s loss is caused by the Bank’s loan impairment provision charges. Operating activity of the Bank remains profitable. The Agency also pays attention to the increase in hryvnia terms in such key indicators of the Bank’s income as net interest income (by 7.07%) and net fee and commission income (by 50.88%).

Table 3

Selected indicators of income and expenses of PJSC «ALFA-BANK» for the 2014

UAH ths, %, p.p.

Indicators

2014

2013

Change

Growth rate. %

Net interest income

1,717,858

1,604,432

113,426

7.07%

Net fee and commission income

767,072

508,415

258,657

50.88%

Net fee and commission income/Net interest income ratio

44.65%

31.69%

12.96 p.p.

-

Gains less losses from operations with securities in the trading portfolio of the bank

711,168

-2,653

713,821

-

Gains less losses from operations with foreign currency

-81,059

74,274

-155,333

-

Administrative and other operating expenses

1,707,508

1,410,632

296,876

21.05%

Net profit

-744,050

13,113

-757,163

-

ROE, %

-21.20%

0.31%

-

-

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

4. Taking into consideration a dynamic character of developing events in the banking system of Ukraine, the Agency has studied the Bank’s statements for January of 2015 and informs that as at 02.02.2015:

- Regulatory capital of the Bank amounted to UAH 5.917 bln;

- Normative indicator of the regulatory capital adequacy (N2) was 15.31%;

- Normative indicator of instant liquidity (N4) was 86.82%;

- Normative indicator of current liquidity (N5) was 80.07%;

- Normative indicator of short-term liquidity (N6) was 80.03%.

The above mentioned normative indicators of the Bank have still complied with a sufficient reserve to the normative values, set by NBU.

Besides that the Agency reminds the following:

- On October 24, 2014 PJSC «ALFA-BANK» fully and on time repaid a syndicated loan in the amount of USD 72.5 mln attracted on October 24, 2013;

- On January 6, 2015 the Bank fully and timely paid interest income on bonds of Series K for the third interest period. The payment per bond has amounted to UAH 99.73, total amount of payments is UAH 4.26 mln. The Series K bonds issue are valued at UAH 300 million and have a five-year maturity (through 4 July 2018). The coupon rate for the second year is 20% per annum, and will be payable twice a year. The bonds feature an annual put option;

- On January 28, 2015 the Bank fully and timely paid the interest income on bonds Series M for the first interest period. Series M bonds issue is valued at UAH 500 million and has a three-year maturity (through 25 October 2017). The bonds feature an annual put option. An interest income on Series M bonds consist of basic income and an additional income in the form of indexation of the USD rate. The coupon rate on Series M bonds for the first year is 10% per annum. An interest income will be payable quarterly.

- PJSC «ALFA-BANK» in 2014 and 2015 has continued the cooperation with the Deposit Guarantee Fund of individuals, carrying out the payments to the depositors of problem banks. The Agency considers that the Bank’s partnership with the DGFI also indicates its reliability, since the Fund performs its own analysis of activity of the banks-participants of the Fund.

Making decision to confirm a long-term credit rating of PJSC «ALFA-BANK» at the level uaAAA, the Agency was guided by the following conclusions:

  • The capitalization normative indicators of PJSC «ALFA-BANK» have demonstrated the growth on the back of the decrease in the banking system’s averages. Such dynamics of the normative indicators N1 and N2 of PJSC «ALFA-BANK» confirms a good level of the Bank’s resistance to the crisis phenomena of systematic character;
  • Bank has been provided with a sufficient level of liquidity: in January of 2015 and at the beginning of February of 2015 the liquidity normative indicators had a sufficient reserve with respect to its limit values, set by NBU;
  • In a difficult economic period, the Bank continued lending of key customers and managed to increase key components of the resource base in hryvnia terms, as well as provided the such key indicators of any bank’s income as net interest income and net fee and commission income;
  • The Bank has fully and timely met its commitments in the bond market and in the international capital market; it has cooperated with the DGFI on a significant scale.

Confirmation of the credit rating of PJSC «ALFA-BANK» - 24.02.2015 (english version)

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