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IBI-Rating has affirmed the credit rating of JSC «BANK CREDIT DNEPR» at uaA- grade, with «in development» outlook

14.01.2019
Rating agency IBI-Rating informs on affirming of the credit rating of JSC «BANK CREDIT DNEPR» at uaA- grade, with «in development» outlook. 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 October, ranked the 20th by assets among the 81 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 37 branches in 8 oblasts of Ukraine. The Bank has a rather large customer base, 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 in regulatory capital levels and, accordingly, the regulatory capital adequacy ratio in the third quarter of 2018 was due to an increase in 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. In order to support the prudential ratios of capital and the implementation of the Capitalization Program, the shareholder of the Bank on 05.11.2018 decided to increase the authorized capital. In addition, in the fourth quarter of 2018, the Bank received a positive effect from settling a substantial amount of problem credit debt. Through to the measures taken by the shareholder and the Bank’s management, as of December 28, 2018, the regulatory capital of the Bank was increased to more than UAH 1 billion, and the estimated value of the capital adequacy ratio (H2) exceeded 13% (with the minimum required 10%). 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 same period of the previous year. According to the results by 9 months of 2018, the net operating income had a positive value and amounted to more than UAH 490 million. At the same time, the operating efficiency ratio reached 115.2%, the cash flow from operating activities was UAH 152 million higher than in the same period of the previous year, which indicates a profound structural change in the quality of management of the Bank’s assets and liabilities.

According to the results of 2017 net operating income was positive and amounted to UAH 362.5 million; the coefficient of efficiency at the same time reached a mark of almost 96%. In turn, due to a decrease of net interest income and a negative result from the change of a long-term foreign currency position at the revaluation of the hryvnia in the first quarter of 2018, net operating income was amount to (-) UAH 50.4 million, which, together with a relatively stable administrative expenses, resulted in negative values of the efficiency ratio and explains the net loss for this period in the amount of UAH 116.8 million. During 2018, the Bank ensured the growth of the high-yield retail loan portfolio, the low-risk loan portfolio of customers in the agro-industrial sector and SMB by more than in 2 times; the amount of net fee and commission income (taking into account the actual result from operations with foreign currency) for the first 9 months of 2018 amounted to UAH 67 million. more compared to the same period in 2017. At the same time, taking into account the significant deductions to provisios for clients' debt on loans, as of December 28, 2018, the loss of the current year amounted to UAH 144.0 million.

The affirmed ratings grades is due to acceptable diversification of the resource base, the existing developed regional network and card business, which contributes to increasing of the customer 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 2015-2017 and 11 months of 2018, target performance indicators, 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