IBI-Rating has affirmed the credit rating of «INDUSTRIAL-FINANCIAL BANK» JSC at uaА- grade

Rating agency IBI-Rating informs on affirming of the credit rating of «INDUSTRIAL-FINANCIAL BANK» JSC at uaА- grade, with a «stable» outlook. The rating of bank deposit reliability has been affirmed at «4» grade (high reliability).

«INDUSTRIAL-FINANCIAL BANK» JSC has been operating in the country’s financial market since 1997 and belongs to relatively small banking institutions. Currently, the Bank is represented in Poltava region (Kremenchug city) and Kyiv region, and its customer base comprises about 6 thousand clients (mainly private individuals). In 2016, the decision on the Bank’s additional capitalization for the amount of UAH 50 mln. was taken; based on the results of the implementation thereof, the ownership structure did not change. Currently, the Bank’s beneficiaries are 2 private individuals (Mr. V.M. Matytsyn and Mrs. T.Yu. Matytsyna). In 2016, the NBU recognized the banking group consisting of «INDUSTRIAL-FINANCIAL BANK» JSC and «Onyx» insurance company. According to the financial statements, as at the beginning of 2017, the Bank’s regulatory capital amounted to UAH 175.82 mln. (the value of N2 ratio accounted for 73.22%), the balance sheet capital amounted to UAH 180.05 mln. The structure of net assets (UAH 407.43 mln.) consisted primarily of loans to corporate borrowers (UAH 204.59 mln.), investments in the NBU certificates of deposit (UAH 117.16 mln.), as well as other components of highly liquid assets (UAH 69.62 mln.); the structure of the resource base consisted primarily of own funds, as well as term deposit funds on current and deposit accounts of clients. The quality of assets and the resource base is satisfactory. By results of 2016, a modest increase in revenues and expenses of the banking institution was observed, while the final financial result in the mentioned period amounted to UAH 25.8 mln. Based on the results of 2016, the value of the performance indicator accounted for 176%. In the period under review, the impact of the administrative costs on the Bank’s profitability was high, while that on forming of reserves for active operations was moderate.

The bank’s ratings are supported by high ratios of liquidity and operating efficiency of the banking institution in the background of a sufficient level of support by the Bank owners (periodic increase of the capital, placement of funds of related parties on the Bank accounts). Moreover, the asset quality is preserved at a sufficient level, i.e. the share of overdue and negatively- classified indebtedness in the loan portfolio is insignificant, a substantial amount of funds is placed in highly liquid assets with fixed income.

At the same time, the banking institution remains dependent on its key counterparties (their concentration both in the resource base, and in assets), while a relatively weak market position and a limited level of diversification of activities increases the Bank’s sensitivity to changes in the operating environment.

Apart from that, a difficult situation in the economy retains its impact on the Bank’s ratings, limiting financial capabilities of the population and enterprises of the real sector, as well as affecting adversely the level of confidence to banking institutions.

In order to conduct the analytical research the materials provided by «INDUSTRIAL-FINANCIAL BANK» JSC has been used, including: annual financial statements for 2014- 2016, other necessary internal information, as well as the information from the public sources, which the Rating agency considers credible.