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IBI-Rating has affirmed the rating of bank deposit reliability of CB «Lviv» PJSC at 5 grade
14.07.2016IBI-Rating informs on affirming of the rating of bank deposit reliability of CB «Lviv» PJSC at 5 grade (excellent reliability). Rating of bank deposit reliability at grade 5 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, and has a good reputation. The likelihood of problems with a timely return of deposits is low, as the financial institution is not highly sensitive to the impact of external and internal factors. The impact assessment of external factors does not apply to the situations involving force majeure circumstances.
The affirmed rating grade of CB «Lviv» PJSC is due to its preserving of sufficient capitalization, complying with the requirements of the NBU. However, uncovered losses of previous years reduce volumes of both its own capital, and regulatory capital to the level, which is lower than the amount of authorized capital. During the analyzed 6 months, the provision of capital improved. CB «Lviv» PJSC meets its obligations to creditors in a timely manner and in full volume. The amount of highly liquid assets is at a high level (accounting for over 25% of the assets), and their quality improved as a result of the Bank’s acquisition of government bonds, which are highly liquid. The actual economic liquidity ratios significantly exceed the minimum acceptable values established by the NBU. At the same time, the Bank's existing dependence on its major corporate customers both in the resource base, and in the asset structure may exert pressure on the Bank's liquidity and increases its susceptibility to certain financial risks. It is also worth noting, that in certain zonal periods negative liquidity gaps, exceeding 10%, were observed.
During the period under review, dependence of CB «Lviv» PJSC on the financial condition of a small number of borrowers persisted, which increases the Bank’s vulnerability to credit risk. The Bank is also sustaining losses on the previously granted foreign currency denominated loans. During the period under review, the gradual increase in both the volume and the proportion of the overdue debt on the loans granted to customers, continued. Moreover, the impact on sensitivity to certain financial risks may increase as a result of persisting negative tendencies in the country’s economy and reduced solvency of borrowers. A key component of the resource base remained amounts due to customers, formed mainly by funds of individuals, thus, the customer deposit portfolio was diversified by major depositors. However, the Bank's resource base is still inherent in dependence on major creditors, which constraints the Bank's financial flexibility and increases the Bank's susceptibility to liquidity risk.
By results of 2015, the Bank’s activity was loss-making, which was, inter alia, caused by the transition to the IFRS. During January-March 2016, the Bank’s activity was profitable, but performance indicators remained low.
IBI-Rating currently sees no factors that may lead to increasing of the Bank’s grade of the rating of bank deposit reliability in the short term. Donwgrading of the rating of bank deposit reliability is possible in the event of worsening of the Bank’s solvency (liquidity), increased credit risks due to deterioration of servicing of the granted loans, increased vulnerability of the Bank to market risks, increased losses, as well as deterioration of the political and economic situation in the country.
In order to conduct the analytical research the materials provided by CB «Lviv» PJSC, have been used, including: annual financial statements for 2013–2015 and 3 months of 2016, target performance indicators for 2016, other necessary internal information, as well as the information from the public sources, which the Rating agency considers credible.
Finance department
For more information please contact:
Press service of IBI-Rating
(044) 362-90-84
press(at)ibi.com.ua
The affirmed rating grade of CB «Lviv» PJSC is due to its preserving of sufficient capitalization, complying with the requirements of the NBU. However, uncovered losses of previous years reduce volumes of both its own capital, and regulatory capital to the level, which is lower than the amount of authorized capital. During the analyzed 6 months, the provision of capital improved. CB «Lviv» PJSC meets its obligations to creditors in a timely manner and in full volume. The amount of highly liquid assets is at a high level (accounting for over 25% of the assets), and their quality improved as a result of the Bank’s acquisition of government bonds, which are highly liquid. The actual economic liquidity ratios significantly exceed the minimum acceptable values established by the NBU. At the same time, the Bank's existing dependence on its major corporate customers both in the resource base, and in the asset structure may exert pressure on the Bank's liquidity and increases its susceptibility to certain financial risks. It is also worth noting, that in certain zonal periods negative liquidity gaps, exceeding 10%, were observed.
During the period under review, dependence of CB «Lviv» PJSC on the financial condition of a small number of borrowers persisted, which increases the Bank’s vulnerability to credit risk. The Bank is also sustaining losses on the previously granted foreign currency denominated loans. During the period under review, the gradual increase in both the volume and the proportion of the overdue debt on the loans granted to customers, continued. Moreover, the impact on sensitivity to certain financial risks may increase as a result of persisting negative tendencies in the country’s economy and reduced solvency of borrowers. A key component of the resource base remained amounts due to customers, formed mainly by funds of individuals, thus, the customer deposit portfolio was diversified by major depositors. However, the Bank's resource base is still inherent in dependence on major creditors, which constraints the Bank's financial flexibility and increases the Bank's susceptibility to liquidity risk.
By results of 2015, the Bank’s activity was loss-making, which was, inter alia, caused by the transition to the IFRS. During January-March 2016, the Bank’s activity was profitable, but performance indicators remained low.
IBI-Rating currently sees no factors that may lead to increasing of the Bank’s grade of the rating of bank deposit reliability in the short term. Donwgrading of the rating of bank deposit reliability is possible in the event of worsening of the Bank’s solvency (liquidity), increased credit risks due to deterioration of servicing of the granted loans, increased vulnerability of the Bank to market risks, increased losses, as well as deterioration of the political and economic situation in the country.
In order to conduct the analytical research the materials provided by CB «Lviv» PJSC, have been used, including: annual financial statements for 2013–2015 and 3 months of 2016, target performance indicators for 2016, other necessary internal information, as well as the information from the public sources, which the Rating agency considers credible.
Finance department
For more information please contact:
Press service of IBI-Rating
(044) 362-90-84
press(at)ibi.com.ua