OREANDA-NEWS. On 21 July 2009 Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it downgraded to uaBBB- (uaBBB minus) from uaBBB the long-term credit rating assigned to Kharkiv-based Kharkivskyi Joint-Stock Commercial Zemelnyi Bank (Zembank) and its registered coupon bonds (series A) for the amount of UAH50m, with 5-year original maturity. The outlook on the ratings is negative. In the course of analysis Credit-Rating considered bank`s financial statements for 2007-2008 and 1Q2009 and its other inside information.

An obligor or a debt liability with uaBBB credit rating is characterized with the SUFFICIENT creditworthiness as compared to other Ukrainian obligors or debt liabilities. This level of creditworthiness is affected by adverse changes in commercial, financial and economic conditions. A plus "+" and a minus "-" signs indicate intermediary categories compared to the standard categories (grades).

Negative outlook indicates that there is a possibility to downgrade the rating in the course of the year, on condition that negative tendencies are retained and current risks are realized.

Factors maintaining the credit rating

High bank`s capitalization ratios.

Low specific gravity of overdue debts in the customer loan portfolio of 0.34% as at Apr. 1, 2009.

Factors constraining the credit rating

High concentrations of the loan portfolio by primary borrowers, which may negatively affect bank`s liquidity and capitalization.

A sharp decline in indicators of bank`s liquidity, for which maintenance the bank had to attract loans from the National Bank of Ukraine.

High concentrations of the resource base by primary lenders, which constrains bank`s financial flexibility and raises the liquidity risks.

The bank`s risk management system requires enhancements.

Growing impact of external factors on the financial market and decrease in business activities in certain industries, combined with significant amounts of loans granted in foreign currencies, which, under depreciating national currency, may negatively affect solvency of certain borrowers and bank`s financial indicators.