IBI-Rating has affirmed the rating of bank deposit reliability of "BANK MIKHAILOVSKY" PJSC at 4+ grade

Rating agency IBI-Rating informs on the affirmation of the rating of bank deposit reliability of «BANK MIKHAILOVSKY» PJSC at grade «4+» (high reliability). Rating of bank deposit reliability at grade 4+ indicates that the financial institution is reliable, pays its obligations timely within the requirements established by the current legislation of Ukraine, including those of the National Bank of Ukraine. The problems with a timely return of deposits are unlikely to arise, although there is a certain dependence of the financial institution on the impact of external and internal factors. The impact assessment of external factors does not apply to the situations involving force majeure circumstances.

The affirmation of the rating grade is due to the Bank’s maintaining of its high capitalization level. «BANK MIKHAILOVSKY» PJSC meets its obligations to creditors in a timely manner and in full. The volume of highly liquid assets is at a high level, and their quality is acceptable. The actual values of economic liquidity ratios exceed the minimum allowable values established by the NBU. However, further deterioration in loan quality and a possible outflow of customer funds may put pressure on the Bank's liquidity and increase its vulnerability to certain financial risks. It should be noted that the Bank remains dependent on the financial condition of a small number of borrowers, but during the analyzed period this dependence decreased slightly. Also the vulnerability of "BANK MIKHAILOVSKY" PJSC to credit risk increases as the Bank carries out its activities in the risky segment in the conditions of declining in the population real incomes. At the same time, the amount of overdue debt is gradually increasing, but its share in the client loan portfolio remains low. In addition, the impact on sensitivity to financial risks may increase as a result of persistence of adverse trends in the economy and reduced solvency of borrowers.

The main components of the resource base remain the owner’s funds and amounts due to customers. The latter are mostly formed by term deposits of individuals, which determines good diversification of the customer deposit portfolio by major depositors. However, in the current situation, this structure of the resource base is quite concentrated by sources of formation, which may adversely impact on liquidity of the Bank. During the analyzed period, the activities of of "BANK MIKHAILOVSKY" PJSC were profitable, and the Bank's performance indicators remained at a high level. IBI-Rating notes positive changes in the Bank's operations and its financial results (increased profitability, growth of performance indicators), and provided that such dynamics continues and the asset quality is maintained and the resource base is diversified, a change of the outlook or review of the rating grade may be possible. Downgrading of the rating of bank deposit reliability is possible in the event of worsening of the Bank’s solvency (liquidity); growth of credit risks due to deterioration of servicing of the granted loans and the Bank's increased vulnerability to market risks, as well as deterioration of the political and economic situation in the country.

In order to perform the analytical research the materials provided by "BANK MIKHAILOVSKY" PJSC were used, including the annual financial statements for 2013-2015, other necessary internal information, as well as the information from the public sources, which the rating agency considers reliable.

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