OREANDA-NEWS. November 25, 2011. Expert Rating Agency confirmed the rating of VAB Bank at uaAA national scale, which stands for very high reliability of the Bank in the long-term perspective, reported the press-centre of VAB Bank.

This rating confirmation was rested on a number of factors as follows.   Assets of the Bank saw a 28.19%, or a UAH 1.9 bn, growth between 1 October 2010 and 1 October 2011, to reach the total of UAH 8.7 bn.  Highly liquid assets went up by 50.79% to UAH 1.13 bn as at 1 October 2011.  The Bank’s credit portfolio reached UAH 6.7 bn at the end of Q3, which is 12.45% higher than during the same period of the previous year.  Loan devaluation reserves have shown a 33.88% growth whereas the reserves to credit portfolio ratio hit the 21.55% mark versus 19.04% being the average for the banking system in general.

Bank’s liabilities increased by UAH 1.98 bn, or 31.99%, during the 12-month period to reach UAH 8.2 bn at the end of Q3, 2011.  Key components of the funding base have demonstrated the following dynamics: cash of individuals have gone up by 48.78%, or UAH 1.38 bn, reaching UAH 4.2 bn; cash of corporate clients has shown a 22.69% increment, while the amount of cash attracted from other banks has dropped by 15.67%.

During the period in review the Bank has managed to more than double its net interest income  (seeing a 113%  increase), compared to the average of 5.57% across the banking system during the same period.   However, due to continuing growth of loan devaluation reserves the Bank has shown loss in the third quarter, equal to UAH 301.9 m at 1 October 2011.  Such situation remains quite typical for many Ukrainian banks: the aggregate business result of the banking system as of 1 October 2011 was negative.

The explanation is that most borrowers still have not completely recovered from the crisis, which causes growth of problem debts requiring further reserve coverage.  The Agency has noted that the Bank does its best to reduce problem debt, including through loan restructuring, and is actively mobilises litigation mechanisms.

“The Bank has continued to strengthen its market position.  Assets and liabilities have shown good growth rates, with liquid asset base raised 1.5 times.  The Bank has been able to double its net interest income, which is expected to have a positive effect on profitability in the future.  The Bank’s regulatory capital fully covers the risks that arise in the course of its operational activity, including those related to growth of problem debts and losses.  Furthermore, the Bank continues to substantially exceed the required norms of capital.  So generally the analysis of VAB Bank’s performance in the third quarter has demonstrated its dynamic growth.  The Agency also believes that Bank shareholders have sufficient resources to support continued stability of the Bank’s operation,” Mr. Vitaly Shapran, Expert Rating’s chief financial analyst, comments.

As of 1 October 2011, regulatory capital of the Bank was UAH 1.4 bn, its adequacy ratio (Н2) 16.02% (versus the required 10% or more), and regulatory capital to total assets ratio (Н3) 13.45% (versus the mandatory 9% or more). 

“We continue building out relationships with both corporate and retail customers, strengthening new credit portfolios, working with the portfolio of overdue debts accumulated during the crisis, and actively expanding resource base to reach out for new market segments.  Amid deficit of hrivnia liquidity throughout the banking sector banks began shifting focus towards attracting more deposits and revising credit activity efficiency in different segments.  Priority lines for corporate lending will now be selected based on prospects and rates of sector development and on the Bank’s own capabilities whose objective assessment is achieved, inter alia, with the help of surveys conducted by independent rating agencies,” Mr. Denis Maltsev, VAB Bank first deputy chairman, summarises.