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IBI-Rating has affirmed the credit rating of JSCB «Lviv» at uaA grade and changed the rating outlook to «positive»
26.11.2019
IBI-Rating informs on affirming of the credit rating of JSCB «Lviv» at uaA grade and changing the rating's outlook to «positive». The rating of bank deposit reliability has been affirmed at «5» grade.
Since foundation in 1991, JSCB «Lviv» (hereafter Bank Lviv) has been working in the Western Ukraine. The new ownership structure of Bank Lviv was registered in 2018, when the independent Swiss asset management company ResponsAbility Participations AG acquired the controlling share of 51%. ResponsAbility is a leading asset management company in the field of investment, which provides financing through borrowing and financing from its own resources in emerging economies; the shareholders of the company are reputable institutions in the Swiss financial market. As a result of the contributions ResponsAbility, the authorized capital of Bank Lviv over the past year has been increased by UAH 133 million. Significant contributions to the authorized capital made by Swiss ResponsAbility has provided much needed means for bank to grow its lending portfolio, moreover ResponsAbility has placed additional funds on subordinated debt terms. At present, the process of raising the authorized capital by converting a part of subordinated debt funds in the amount of UAH 104 million is ongoing. That is, after completion of the procedure for registering changes in the capital of the Institution, the authorized capital will amount to UAH 542.4 million.
During the analyzed period Bank Lviv complied with prudential requirements and limits for currency position. The actual performance of the liquidity standards were maintained at a sufficient level during the analyzed period to offset current liquidity risks and significantly exceeded the minimum required values. Moreover, Bank Lviv shows a significant buffer above the requirements for the new liquidity coverage ratio (LCR), set by the regulator at the beginning of 2019. Unlike the previous year, the financial results of the Bank Lviv in January-September of this year were profitable, in particular, it contributed to the expansion of the quality loan portfolio, which was reflected in a significant increase in net interest income. The Bank's net profit for the 9 months of 2019 amounted to UAH 13.4 million.
The affirmed credit rating grade of Bank Lviv and changing the rating's outlook to «positive» is based on assessment and positive development in areas such as strong financial support from shareholders, positive dynamics of key financial indicators, acceptable diversification of the funding base representing a mix of client deposits and IFI funding. Additionally, it should also be noted the further improvements in the diversification of the loan portfolio and significant decrease of the share of top borrowers in total loan portfolio, sufficient liquidity and improvement of the performance indicators. However, factors that may some extent effect on the future development of the institution and could potentially lead to decrease of the performance indicators. These could include: low or limited demand for bank lending, vulnerability of the banking system to operational risks, unexpected legislative constrains, the slowdown in the economy. At the same time, implementation of new strategy in the bank by Swiss shareholder, commitment of both owners to provide needed funds and to rise capital base of the bank as well strong interest of the international financial institutions to support development of the bank by providing necessary financing, lays at the foundation of further dynamic development of Bank Lviv and increased sustainability resulting, which leads to higher profitability.
Analytical research was based on materials provided by Bank Lviv, including: financial statements 2016-2018 and January-September of 2019, target performance indicators, other necessary internal information, as well as the information from 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
Since foundation in 1991, JSCB «Lviv» (hereafter Bank Lviv) has been working in the Western Ukraine. The new ownership structure of Bank Lviv was registered in 2018, when the independent Swiss asset management company ResponsAbility Participations AG acquired the controlling share of 51%. ResponsAbility is a leading asset management company in the field of investment, which provides financing through borrowing and financing from its own resources in emerging economies; the shareholders of the company are reputable institutions in the Swiss financial market. As a result of the contributions ResponsAbility, the authorized capital of Bank Lviv over the past year has been increased by UAH 133 million. Significant contributions to the authorized capital made by Swiss ResponsAbility has provided much needed means for bank to grow its lending portfolio, moreover ResponsAbility has placed additional funds on subordinated debt terms. At present, the process of raising the authorized capital by converting a part of subordinated debt funds in the amount of UAH 104 million is ongoing. That is, after completion of the procedure for registering changes in the capital of the Institution, the authorized capital will amount to UAH 542.4 million.
During the analyzed period Bank Lviv complied with prudential requirements and limits for currency position. The actual performance of the liquidity standards were maintained at a sufficient level during the analyzed period to offset current liquidity risks and significantly exceeded the minimum required values. Moreover, Bank Lviv shows a significant buffer above the requirements for the new liquidity coverage ratio (LCR), set by the regulator at the beginning of 2019. Unlike the previous year, the financial results of the Bank Lviv in January-September of this year were profitable, in particular, it contributed to the expansion of the quality loan portfolio, which was reflected in a significant increase in net interest income. The Bank's net profit for the 9 months of 2019 amounted to UAH 13.4 million.
The affirmed credit rating grade of Bank Lviv and changing the rating's outlook to «positive» is based on assessment and positive development in areas such as strong financial support from shareholders, positive dynamics of key financial indicators, acceptable diversification of the funding base representing a mix of client deposits and IFI funding. Additionally, it should also be noted the further improvements in the diversification of the loan portfolio and significant decrease of the share of top borrowers in total loan portfolio, sufficient liquidity and improvement of the performance indicators. However, factors that may some extent effect on the future development of the institution and could potentially lead to decrease of the performance indicators. These could include: low or limited demand for bank lending, vulnerability of the banking system to operational risks, unexpected legislative constrains, the slowdown in the economy. At the same time, implementation of new strategy in the bank by Swiss shareholder, commitment of both owners to provide needed funds and to rise capital base of the bank as well strong interest of the international financial institutions to support development of the bank by providing necessary financing, lays at the foundation of further dynamic development of Bank Lviv and increased sustainability resulting, which leads to higher profitability.
Analytical research was based on materials provided by Bank Lviv, including: financial statements 2016-2018 and January-September of 2019, target performance indicators, other necessary internal information, as well as the information from 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