IBI-Rating has downgraded the credit rating of JSC «FIRST INVESTMENT BANK» to uaBBB- grade

IBI-Rating has downgraded the credit rating of JSC «FIRST INVESTMENT BANK» to uaBBB– grade with a «negative» outlook and CreditWatch listing. The rating of bank deposit reliability has affirmed at the «4» grade (high reliability).

JOINT STOCK COMPANY «FIRST INVESTMENT BANK» was registered by the National Bank of Ukraine on 20 of June 1997. The main shareholder of the bank is a non-resident individual Giner Evgeny Lennorovich. According to the results of 2022, the bank ranked 57th in terms of assets among 67 banking institutions of Ukraine; 57th position - by the size of the funds raised from the individuals; 58th - on the volume of corporate clients funds; 54th - by the size of balance capital; 58th - by the financial results. The regional network is represented by 11 branches in 5 oblasts of Ukraine. The client base includes almost 7,5 thousand customers, inclusive of 6,3 thousand individuals.

Liquidity ratios in the analyzed period were fulfilled by the bank with a significant margin. Due to the significant volume of investments in government securities, the share of highly liquid assets remains at the level of 75% of assets. In turn, as a result of military operations, the bank's total customer deposit portfolio for 2022 demonstrated a significant reduction, which necessitated the involvement of the regulator's funds and affected the reduction of net interest income and, accordingly, performance indicators in general.

The activity of the Bank during the past years was profitable, however, according to the results of 2022, the financial result of JSC «FIRST INVESTMENT BANK» was negative and amounted to (-)136.6 million UAH compared to 42.2 million UAH of profit in 2021. Taking into account the worsening condition of loan servicing by individual large borrowers, as well as the substitution of cheap funds of customers on demand with the resources of the National Bank, there is a decrease in the value of the efficiency factor of the banking institution, which, according to the results of 2022, amounted to 37% (against 114% in 2021).

The credit rating downgrading is due to the strengthening of operational risks, which is associated with the ownership structure and limited opportunities for the implementation of development strategies, the concentration of the client loan portfolio by the main borrowers, which increases the bank's vulnerability to credit risk, the deterioration of the quality of working assets, high dependence on the funds of the regulator, concentration of the resource base by the main creditors, as well as unprofitable current activities and low performance indicators. In turn, the bank has a sufficient capital stock to form additional reserves without a significant negative impact on the main financial indicators, an acceptable balance of assets and liabilities by maturity. In addition, the Rating Agency notes the sensitivity of the banking system of Ukraine to operational and credit risks, which is caused by prolonged military operations on the territory of Ukraine due to aggression by the Russian Federation, as well as the deterioration of operating conditions and uncertainty regarding the prospects for economic development.

In order to conduct the analytical research the materials provided by JSC «FIRST INVESTMENT BANK» have been used, including: financial statements for 2020-2022, other necessary internal information, as well as the information from the public sources, which the Rating agency considers credible.

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