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IBI-Rating has upgraded the credit rating of JSCB Lviv to uaAA grade
05.09.2023
IBI-Rating informs on upgrading of the credit rating of JSCB «Lviv» to uaAA grade with outlook «evolving». The credit rating has been kept on the Credit Watch List due to the martial law imposed due to the invasion of Ukraine by Russian troops, which has a significant negative impact on the country's economic situation and financial stability. The rating of bank deposit reliability has been affirmed at «5» grade (excellent reliability).
The new ownership structure of JSCB «Lviv» (further — 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 of ResponsAbility, the authorized capital of Bank Lviv has been increased by UAH 133 million. On March 29, 2021, the National Bank of Ukraine approved the acquisition of a substantial interest of 13.94% of the authorized capital of Bank Lviv by the international financial institution Nordic Environment Finance Corporation (Nefco). In the second quarter of 2021, the shareholders contributed UAH 270 million to the authorized capital, which as of July 1, 2023 amounted to UAH 708.4 million. Thus, the share of shares held by ResponsAbility Participations AG and New Progress Holding LLC amounted to 48.56% and 27.98%, respectively. The regional network of Bank Lviv is represented by the Head Office and 19 branches in 7 regions of Ukraine, including the capital region. The bank is mainly represented in the Western region, with the largest number of branches located in Lviv and Lviv oblast.
During the analyzed period, Bank Lviv complied with all prudential requirements and limits for currency position. It should also be noted, the bank meets the requirements for the liquidity coverage ratio (LCR) by a significant margin. According to the results of 6 months of 2023, activities of Bank Lviv were profitable, which was facilitated by the growth of the loan portfolio that reflected in a significant increase in net interest income. The positive financial result according to the results of the first half 2023 amounted to UAH 63.7 million. The ratio of administrative expenses to total income remains at a low level, which, against the background of the growing dynamics of commissions, interest income and income from trading operations, contributes to the high value of the activity efficiency ratio – almost 170% according to the results of the first half of 2023.
The upgrading of Bank Lviv's credit rating is based on: strong financial support from shareholders, including strategic investors - Swiss asset management company ResponsAbility Participations AG and international financial corporation NEFCO, strengthening of institution's market positions, increase of authorized capital, positive dynamics of key financial indicators, good diversification of the resource base, represented by a combination of customer deposits and international financial organizations 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, there are some factors that may 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, economic slowdown, ongoing military operations in Ukraine due to the aggression of the Russian Federation. At the same time, the implementation of the bank's new strategy, increase of the bank's capital as well as strong interest of the international financial institutions to support bank’s development by providing necessary financing, lays at the foundation of further dynamic development of Bank Lviv and increased sustainability resulting, which leads to higher profitability.
In order to conduct the analytical research the materials provided by Bank Lviv have been used, including: annual financial statements for 2020-2022 and 6 months of 2023, 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 us:
Press service of IBI-Rating
(044) 362-90-84
press(at)ibi.com.ua
The new ownership structure of JSCB «Lviv» (further — 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 of ResponsAbility, the authorized capital of Bank Lviv has been increased by UAH 133 million. On March 29, 2021, the National Bank of Ukraine approved the acquisition of a substantial interest of 13.94% of the authorized capital of Bank Lviv by the international financial institution Nordic Environment Finance Corporation (Nefco). In the second quarter of 2021, the shareholders contributed UAH 270 million to the authorized capital, which as of July 1, 2023 amounted to UAH 708.4 million. Thus, the share of shares held by ResponsAbility Participations AG and New Progress Holding LLC amounted to 48.56% and 27.98%, respectively. The regional network of Bank Lviv is represented by the Head Office and 19 branches in 7 regions of Ukraine, including the capital region. The bank is mainly represented in the Western region, with the largest number of branches located in Lviv and Lviv oblast.
During the analyzed period, Bank Lviv complied with all prudential requirements and limits for currency position. It should also be noted, the bank meets the requirements for the liquidity coverage ratio (LCR) by a significant margin. According to the results of 6 months of 2023, activities of Bank Lviv were profitable, which was facilitated by the growth of the loan portfolio that reflected in a significant increase in net interest income. The positive financial result according to the results of the first half 2023 amounted to UAH 63.7 million. The ratio of administrative expenses to total income remains at a low level, which, against the background of the growing dynamics of commissions, interest income and income from trading operations, contributes to the high value of the activity efficiency ratio – almost 170% according to the results of the first half of 2023.
The upgrading of Bank Lviv's credit rating is based on: strong financial support from shareholders, including strategic investors - Swiss asset management company ResponsAbility Participations AG and international financial corporation NEFCO, strengthening of institution's market positions, increase of authorized capital, positive dynamics of key financial indicators, good diversification of the resource base, represented by a combination of customer deposits and international financial organizations 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, there are some factors that may 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, economic slowdown, ongoing military operations in Ukraine due to the aggression of the Russian Federation. At the same time, the implementation of the bank's new strategy, increase of the bank's capital as well as strong interest of the international financial institutions to support bank’s development by providing necessary financing, lays at the foundation of further dynamic development of Bank Lviv and increased sustainability resulting, which leads to higher profitability.
In order to conduct the analytical research the materials provided by Bank Lviv have been used, including: annual financial statements for 2020-2022 and 6 months of 2023, 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 us:
Press service of IBI-Rating
(044) 362-90-84
press(at)ibi.com.ua