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IBI-Rating has affirmed the rating of bank deposit reliability of "Lvov" Bank PJSC at grade 5
06.10.2015IBI-Rating informs on the affirmation of the rating of bank deposit reliability of "Lvov" Bank PJSC at grade 5 (excellent reliability). Rating of bank deposit reliability at grade 5 indicates that the financial institution is reliable, pays its obligations timely within the requirements established by the current legislation of Ukraine, including those of the National Bank of Ukraine, and has a good reputation. The likelihood of problems with a timely return of deposits is low, as the financial institution is not highly sensitive to the impact of external and internal factors. The impact assessment of external factors does not apply to the situations involving force majeure circumstances.
The affirmed rating of "Lvov" Bank PJSC is due to its acceptable capitalization meeting the regulator’s requirements, but its volume provides only partial coverage of credit and investment risks. At the same time, it should be noted that the amounts of both own and regulatory capital are below the authorized level because they are decreased by the amount of losses of previous years. However, according to «IBI Rating», if necessary, the Bank can count on the support of the owners, as evidenced, inter alia, by the shareholders’ increase of the authorized capital by UAH 15 million. During the analyzed period there was deterioration in the quality of the granted loans whereby the volume and share of overdue credit indebtedness in the structure of the customer loan portfolio increased. At the same time the impact on the susceptibility to financial risks may increase as a result of the persistence of negative trends in the economy and reduced solvency of borrowers, and also because of the exceptional concentration of the customer loan portfolio by major borrowers. Despite the fact that due to the devaluation of the national currency the Bank violates the maximum value of the regulatory ratio of credit risk per counterparty, set by the Regulator, the Rating agency did not reveal any significant complaints from the customers to the the Bank’s operations.
The financial institution meets its obligations to creditors in a timely manner and in full, but the implementation of credit and market risks may put pressure on the Bank’s liquidity. The main component of the resource base are amounts due to customers, which, given the current situation in the country, bears a potential threat with regard to the deterioration of liquidity due to the decreasing confidence of the population in the banking system. At the same time, the Bank's vulnerability to the liquidity risk increases due to the available concentration of the resource base by major creditors. The Bank’s activity remains profitable, but in May and July 2015 the Bank sustained losses, which led to a decrease in the previously earned profit. Accordingly, the performance indicators remain low.
A positive impact on the rating of bank deposit reliability may have the following: reduced dependence on major borrowers, reduced concentration of the resource base by creditors, as well as the implementation of the directions of the Bank’s development strategy. A negative impact on the rating of bank deposit reliability may have the following: deterioration of the Bank’s solvency (liquidity), further deterioration in asset quality, increased vulnerability of the Bank to market risks, the decline in performance indicators and loss-making operations, as well as the deterioration of the political and economic situation in the country.
In order to perform the analytical research the materials provided by "Lvov" Bank PJSC were used, including the annual financial statements for 2011-2014 and January-September 2015, other necessary internal information as well as the information from public sources, which the Rating agency considers reliable.
Finance department
For more information please contact:
Press service of IBI-Rating
(044) 362-90-84
press(at)ibi.com.ua
The affirmed rating of "Lvov" Bank PJSC is due to its acceptable capitalization meeting the regulator’s requirements, but its volume provides only partial coverage of credit and investment risks. At the same time, it should be noted that the amounts of both own and regulatory capital are below the authorized level because they are decreased by the amount of losses of previous years. However, according to «IBI Rating», if necessary, the Bank can count on the support of the owners, as evidenced, inter alia, by the shareholders’ increase of the authorized capital by UAH 15 million. During the analyzed period there was deterioration in the quality of the granted loans whereby the volume and share of overdue credit indebtedness in the structure of the customer loan portfolio increased. At the same time the impact on the susceptibility to financial risks may increase as a result of the persistence of negative trends in the economy and reduced solvency of borrowers, and also because of the exceptional concentration of the customer loan portfolio by major borrowers. Despite the fact that due to the devaluation of the national currency the Bank violates the maximum value of the regulatory ratio of credit risk per counterparty, set by the Regulator, the Rating agency did not reveal any significant complaints from the customers to the the Bank’s operations.
The financial institution meets its obligations to creditors in a timely manner and in full, but the implementation of credit and market risks may put pressure on the Bank’s liquidity. The main component of the resource base are amounts due to customers, which, given the current situation in the country, bears a potential threat with regard to the deterioration of liquidity due to the decreasing confidence of the population in the banking system. At the same time, the Bank's vulnerability to the liquidity risk increases due to the available concentration of the resource base by major creditors. The Bank’s activity remains profitable, but in May and July 2015 the Bank sustained losses, which led to a decrease in the previously earned profit. Accordingly, the performance indicators remain low.
A positive impact on the rating of bank deposit reliability may have the following: reduced dependence on major borrowers, reduced concentration of the resource base by creditors, as well as the implementation of the directions of the Bank’s development strategy. A negative impact on the rating of bank deposit reliability may have the following: deterioration of the Bank’s solvency (liquidity), further deterioration in asset quality, increased vulnerability of the Bank to market risks, the decline in performance indicators and loss-making operations, as well as the deterioration of the political and economic situation in the country.
In order to perform the analytical research the materials provided by "Lvov" Bank PJSC were used, including the annual financial statements for 2011-2014 and January-September 2015, other necessary internal information as well as the information from public sources, which the Rating agency considers reliable.
Finance department
For more information please contact:
Press service of IBI-Rating
(044) 362-90-84
press(at)ibi.com.ua