IBI-Rating has resumed the credit rating of JSC «BANK FORWARD» at uaBBB+ grade, as well as the rating of the bank deposit reliability at «5» grade (excellent reliability)

The rating agency IBI-Rating informs on the resuming of the credit rating of JSC «BANK FORWARD» at uaBBB+ grade with «in development» outlook. The rating of bank deposit reliability has been resumed at «5» grade (excellent reliability).

JSC «BANK FORWARD» has been operating since 2005. The bank pays special attention to the segments of consumer lending, card products and deposit programs for the population of Ukraine. At the beginning of September 2018, the customer base had almost 700 thousand customers. The bank is actively developing the provision of services to clients through Internet banking and points of a smaller type. The regional network of the bank covers all settlements with a population of more than 50 thousand and is represented by 18 branches and 50 mini-offices.

During January-July 2018, the volume of regulatory capital of JSC «BANK FORWARD» was negative, which was due to the formation of additional provisions for active operations in connection with the transition to the new accounting model IFRS 9 «Financial Instruments». The shareholder of the banking institution took the necessary measures to restore capitalization to the proper level ? at the end of July of this year, due to an increase in the authorized capital more than doubled, the regulatory capital acquired values that comply with legal requirements (UAH 237.3 million as of August 1, 2018) and as of October 1, 2018 amounted to UAH 239.1 million. The volume of highly liquid assets is maintained at the sufficient level and twice the demand liabilities. Due to a significant increase in authorized capital, the bank has a certain liquidity surplus ? as of the beginning of September 2018, temporarily free funds in the amount of UAH 110 million invested in deposit certificates of NBU. The activity of JSC «BANK FORWARD» in the period under review was unprofitable, primarily due to a reduction in working assets, a negative result from trading operations, and also due to losses from derecognition of financial liabilities. The negative financial result for January-August of the current year amounted to UAH 172.3 million. In turn, increasing equity capital in the structure of liabilities should help improve performance indicators in the future. It should also be noted that following the results of August and September, the bank achieved a positive financial result (UAH 1.2 million and UAH 0.5 million, respectively).

The resuming of the ratings of JSC «BANK FORWARD» at this grades is due to the presence of financial support from the owner (including in the form of a significant increase in authorized capital), sufficient liquidity indicators, balance of assets and liabilities by maturity, and diversification of the client loan and deposit portfolios by major counterparties. In turn, it should be noted that the bank provides services in the high-risk segment of consumer lending, which, given the decline in real incomes of the population, increases the vulnerability to credit risk. The Rating Agency also notes unprofitable current activities (due to additional allocations to reserves for active operations, taking into account the increase in overdue debts of borrowers), the banking system's high sensitivity to operational risks, which is associated with the volatility of the legislative field, the difficult economic situation, and limited financial opportunities population and enterprises of the real sector.

In order to conduct the analytical research the materials provided by JSC «BANK FORWARD» have been used, including: annual financial statements for 2015-2017 years and 8 months of 2018, other necessary internal information, as well as the information from the public sources, which the Rating agency considers credible.

Financial Department
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