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

Rating agency IBI-Rating informs on upgrading of the credit rating of JSC «BANK CREDIT DNEPR» to 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 at the beginning of June 2020, the bank ranked the 19th by assets among the 75 banks of Ukraine. The «Brancroft Enterprises Limited» has been the bank's sole shareholder since 2007, which indirectly belongs to Victor Pinchuk. At the begin of April 2020, the National Bank of Ukraine received a package of documents from Oleksandr Yaroslavskyі, owner and president of the DCH Group, regarding the purchase of JSC «BANK CREDIT DNEPR». On July 30, 2020, the regulator agreed to new investor acquire a significant share in the amount of 100% of the authorized capital of the banking institution. On August 3, 2020, «Brancroft Enterprises Limited» and Oleksandr Yaroslavskyi concluded an agreement on the alienation of 100% of shares in the authorized capital of JSC «BANK CREDIT DNEPR», as a result of which Oleksandr Yaroslavskyi became the ultimate beneficial owner of the financial institution.

The bank has a sufficiently large base of clients, a well-developed infrastructure of card business services. During the analyzed period, the bank actively developed hryvnia retail lending and agribusiness lending. At the end of 2019, the bank modified and submitted to the National Bank of Ukraine the updated Capitalization/Restructuring Plan of JSC «BANK CREDIT DNEPR» for the period till the end of September 2020 (in order to implementation the requirements of the regulator's decision on the basis of the assessment of the stability of banks and the banking system in 2019). Through to the measures taken by the shareholders and the bank's management, as of the beginning of April 2020, regulatory capital amounted to UAH 917 million, and the capital adequacy ratio (H2) exceeded 14%. Thereafter, there was a further improvement of liquidity ratios and an increase of the highly liquid component of assets.

The main indicators of JSC «BANK CREDIT DNEPR» performance are kept positive dynamics compared to previous years. In the analyzed period, the financial result of the institution significantly depended on the formation of provisions for expected credit risks. Thus, due to the formation of additional reserves in the amount of over UAH 220 million Q1 2020, the net financial result for the period was negative (UAH - 204 million). In turn, the Rating Agency positively estimates the process of existing and prospective increase of capitalization, which in the background of reduction of non-working assets should in the near future help to further improve the performance indicators.

The upgrading of the credit rating grade of JSC «BANK CREDIT DNEPR» is due to the improvement of liquidity and capitalization indicators, which was achieved due to the financial support of the owner of the banking institution in the framework of the implementation of the capitalization/restructuring program; positive dynamics of retail lending and lending to clients in the agro-industrial sector; acceptable diversification of the resource base, as well as the gradual decline in non-performing assets. At the same time, the Rating Agency notes that the concentration of the client's loan portfolio by major borrowers is maintained, a significant portion of the overdue debt on the clients' loans, as well as the incomplete balance of assets and liabilities to 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. The «evolving» credit rating outlook is due to uncertainty about the impact on the financial condition of the banking institution (as well as the banking system as a whole) of the expected significant slowdown due to deteriorating epidemiological situation in the country and imposed of economic and administrative restrictions on economic entities and individuals.

In order to conduct the analytical research, the materials provided by JSC «BANK CREDIT DNEPR» have been used, including: annual financial statements for 2017-2019 and 5 months of 2020, 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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