IBI-Rating has affirmed the credit rating of JSC «BANK CREDIT DNEPR» at uaA- grade; the rating outlook is «evolving»

Rating agency IBI-Rating informs on affirming of the credit rating of JSC «BANK CREDIT DNEPR» at uaA- grade; the rating outlook is «evolving». The rating of bank deposit reliability has been affirmed at «4+» grade (high reliability).

JSC «BANK CREDIT DNEPR» has been operating in the banking market since July 1993. According to the classification of the National Bank of Ukraine, the Bank is in the group of banks with private capital and as at the beginning of April 2019, ranked the 19th by assets among the 77 banks of Ukraine. The only one shareholder of the Bank is the «Brancroft Enterprises Limited», which indirectly belongs to Victor Pinchuk. The Bank's regional network is represented by 36 branches in 8 oblasts of Ukraine. The Bank has a rather large base of clients, as well as a developed infrastructure of card business services. The Bank is one of the agent banks of the Deposit Guarantee Fund on payment of compensation to customers of insolvent financial institutions. During last two years, the Bank has paid compensations to customers of more than ten bankrupt financial institutions. During the analyzed period, the bank actively developed hryvnia retail lending and lending to agribusiness clients.

The decrease of regulatory capital levels and, accordingly, the regulatory capital adequacy ratio in the previous year was due to an increase in the provisions for loans to several debtors, which was the result of the implementation of recommendations of the National Bank, including the results of stress testing. Due to the actions taken by the shareholder and the Bank's management, at the beginning of this year, the regulatory capital was increased to the required level: the shareholder was transferred funds to increase the authorized capital and settled the debt on individual problem borrowers, which allowed to disband the share of provisions and contributed to reducing the negative financial result in 2018, etc. In the Q1 of 2019 the shareholder added additional funds for further registration in the authorized capital of the Bank. Accordingly, as a result of the measures taken, the regulatory capital at the beginning of April 2019 amounted to UAH 877 million, and the value of the capital adequacy ratio (N2) exceeded 12%. Thus, there was an improvement in other standards of the banking institution.

The main indicators of the Bank's performance are kept low and substantially depend on the quality of assets and the result of trading operations, however, these indicators have a positive trend compared to the previous. The financial result of 2018, confirmed by the auditor's report by IFRS, amounted to UAH (-) 551.5 million. According to the results of the Q1 by 2019, the net financial result also had a negative value (UAH (-) 486 million), which is primarily due of the cost to forming large provisions for impairment of loans. At the same time, in the first quarter of 2019, the bank received operating profit before deductions in provisions, which, according to the financial statements, amounted to UAH 150.1 million. Operating profit before deductions in provisions for 2018 amounted to UAH 289.6 million.

The affirmed ratings grades of JSC «BANK CREDIT DNEPR» is due to the positive dynamics of retail lending and lending to clients in the agro-industrial sector, acceptable diversification of the resource base, the presence of a developed regional network and card business, which contributes to the growth of the client base and strengthening of positions in the banking market, as well as financial support from the Bank’s owner. At the same time, the Rating agency notes preservation of significant concentration of the customer loan portfolio by major borrowers, a significant proportion of overdue debt on customer loans, as well as an incomplete balance between assets and liabilities by maturity. In turn, it should be noted that the Bank has a significant amount of sufficiently stable funds attracted from the companies, which are recognized as related to the Bank, in accordance with the requirements of the regulatory acts of the NBU, what having a positive impact on the liquidity of the institution.

In order to conduct the analytical research the materials provided by JSC «BANK CREDIT DNEPR» have been used, including: annual financial statements for 2016-2018 and 5 months of 2019, target performance indicators, other necessary internal information, as well as the information from the public sources, which the Rating agency considers credible.

Finance department
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