29.10.2010
Moody's changed outlook on Pivdennyi Bank's B2 ratings to stable from negative
Moscow, October 26, 2010 — Moody's Investors Service has today changed the outlook on Pivdennyi Bank's B2 long-term local currency debt and deposit ratings to stable from negative. The bank financial strength rating (BFSR) of E+, B3 long-term foreign currency deposit rating, Not-Prime short-term local and foreign currency deposit ratings already carried a stable outlook.
RATINGS RATIONALE
"Pivdennyi Bank has preserved its pre-provision income over the last several quarters at a level, which currently enables it to withstand asset quality problems without a significant negative impact on capitalisation, with total capital accounting for over 12% of the bank's assets in accordance with IFRS as of H1 2010" says Ms. Elena Redko, the lead analyst for the bank. "In addition, deterioration of asset quality was less severe than previously anticipated by Moody's. Loans 90+ days overdue stood at a modest compared to Ukrainian peers 4.5% of the loan portfolio as at 30 June 2010," adds Ms. Redko.
Moody's notes that the key rating constraints on Pivdennyi Bank's E+ BFSR are represented by (i) high single-name concentration of the loan book with top-20 credit exposures ranging from 250% to 300% of the bank's Tier 1 capital, (ii) a narrow system-wide franchise, and (iii) still challenging credit conditions in Ukraine. At the same time, the current ratings reflect Pivdennyi Bank's strong franchise in its home market in the Odessa region of Southern Ukraine, a sizeable corporate and retail client base supported by region-wide coverage, as well as good financial fundamentals
Moody's previous rating action on Pivdennyi Bank was on 12 May 2009 when Moody's downgraded the global foreign currency deposit rating from B2 to B3 with negative outlook, which was prompted by the downgrade of Ukraine's foreign currency bank deposit ceiling to B3 with negative outlook.
The principal methodologies used in rating Pivdennyi Bank were "Bank Financial Strength Ratings: Global Methodology", February 2007, and "Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology", March 2007. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.
Headquartered in Odessa, Ukraine, Pivdennyi Bank reported — at 30 June 2010 — total consolidated reviewed IFRS assets of UAH11.8 billion (US$1.5 billion) and net IFRS income profit of UAH53 million (US$6.7 million).
13.08.2010
Fitch revised Pivdennyi to Stable
Fitch Upgrades Industrialbank to 'B-'; Revises Pivdennyi and Khreschatyk to Stable
Fitch Ratings-London/Moscow-13 August 2010: Fitch Ratings has upgraded Ukraine-based Industrialbank's (INB) Long-term Issuer Default Rating (IDR) to 'B-' from 'CCC'. The Outlook is Stable. At the same time, the agency has changed the Outlooks on Bank Khreschatyk (Khreschatyk) and Pivdennyi Bank (PB) to Stable from Negative and affirmed their Long-term IDRs at 'B-'. A full list of rating actions is provided at the end of this commentary.
The rating actions reflect the stabilisation of the economic environment in Ukraine, reflected in positive growth (Fitch forecasts real GDP growth of 4.5% in 2010 and 4.7% in 2011), lower UAH volatility and a less vulnerable fiscal position following the government's agreement on a new loan programme with the IMF. These developments have contributed to a somewhat less difficult operating backdrop for the country's banks. In addition, the rating actions reflect inflows of customer deposits in H209-H110, both for the sector as a whole and the reviewed banks, which have supported liquidity positions; limited near-term refinancing risks for the three banks reviewed; and some signs of stabilisation of the banks' asset quality as loan books season.
At the same time, in common with other banks in the sector, each of the reviewed banks reported significant levels of NPLs (loans overdue by more than 90 days) and large volumes of prolonged/restructured loans. This has increased pressure on the banks' capital and financial performance, while existing loss absorption capacity may prove insufficient should further loan impairment be recognised and higher reserves be required, potentially necessitating additional capital support.
The ratings of INB take into account the bank's apparently large related-party balances and significant deterioration in asset quality. INB's reported NPLs comprised 12% of the loan book at end-H110, and approximately two thirds of the portfolio was restructured or rolled over, although about one fifth of these were secured by deposits which mitigated credit risks. Related-party exposures (including investments in promissory notes) are substantial, in Fitch's view, although the opaque shareholder structure makes it difficult to assess the true level of transactions with affiliated entities. Foreign currency lending was substantial at 45% of the loan portfolio. At the same time, Fitch estimates that at end-H110 INB was able to reserve more than 30% of non-cash collateralised loans before its capital adequacy ratio would breach regulatory limits, and liquidity is adequate, with the cash cushion covering unencumbered deposits by 26% at end-H110, although the latter are concentrated. The improved prospects in 2010 for Ukraine's metallurgy sector, which is the dominant industry in INB's home city of Zaporizhia, should also help to limit ultimate credit losses for the bank.
Khreschatyk's ratings continue to reflect its concentrated loan book, continuing uncertainty associated with a high share of renegotiated/rolled over loans, poor operating profitability and only modest loss absorption capacity afforded by its capital position. However, the ratings also reflect Khreschatyk's limited exposure to unsecured, foreign currency and retail lending, its participation in lower-risk municipal programmes and comfortable liquidity. NPLs and restructured loans accounted for 4.5% and 60% of gross loans, respectively, at end-H110. Fitch, however, notes that 30% of restructured loans related to state-owned and municipal organisations. Customer deposits increased 21% in H110, and highly liquid assets (net of interbank liabilities up to 30 days) covered 19% of customer deposits at end-H110. Khreschatyk reported a regulatory capital adequacy ratio of 15.4% at end-H110, and Fitch estimated that Khreschatyk could increase its loan impairment reserves to a maximum of only around 11% of gross loans from the current level of 4.3% without breaching regulatory capital requirements. A planned equity injection of UAH200m in H210 would boost regulatory capital by 29%; however, further capital increases may be required should restructured loans perform worse than current management expectations.
The ratings of PB reflect heightened credit risks in its loan book as a result of significant borrower concentrations, the large proportion of foreign currency loans (at 59% of the total portfolio) and the still difficult operating environment, although those risks have not translated into significant credit losses to date. PB reported NPLs at 4.5% of the total loan book at end-H110, while the amount of rolled-over exposures comprised 35%. At the same time, the ratings are underpinned by PB's quite stable niche franchise in its home region, its currently adequate liquidity and the redemption of its USD100m eurobond at the beginning of August 2010, which was seen as a positive sign by Fitch. Following the redemption, PB's liquidity cushion was still adequate, covering the deposit base by 21%. The regulatory capital adequacy was 18% at end-H110; however, Fitch estimates that PB was at that date able to reserve only 14% of the portfolio before the capital adequacy ratio would have breached regulatory limits, representing only moderate loss absorption capacity, in the agency's view.
Rating actions:
Industrialbank
Long-term IDR: upgraded to 'B-' from 'CCC'; Outlook Stable
Short-term IDR: upgraded to 'B' from 'C'
Individual rating: upgraded to 'D/E' from 'E'
Support rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
Bank Khreschatyk
Long-term foreign and local currency IDRs: affirmed at 'B-'; Outlook revised to Stable from Negative
Short-term foreign currency IDR: affirmed at 'B'
Individual rating: affirmed at 'D/E'
Support rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
National Long-term rating: affirmed at 'BBB-(ukr)'; Outlook revised to Stable from Negative
Pivdennyi Bank
Long-term IDR: affirmed at 'B-'; Outlook revised to Stable from Negative
Short-term IDR: affirmed at 'B'
Individual rating: affirmed at 'D/E'
Support rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
Applicable criteria, 'Global Financial Institutions Rating Criteria' and 'Recovery Ratings for Financial Institutions', both dated December 2009, are available at www.fitchratings.com.
Contacts:
Olga Ignatieva, Dmitri Abramov, Moscow, Tel.: +7 495 956 9901
Svetlana Petrischeva, London, Tel.: +44 207 682 7131.
Media contact:
Anna Bykova, Moscow, Tel.: + 7 495 956 9903/9901, anna.bykova@fitchratings.com
Additional information is available on www.fitchratings.com.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.
03.08.2010
Pivdennyi announced successful redemption of its USD $100 Million Eurobond
Public Company Joint-Stock Bank Pivdennyi ("Pivdennyi") announces the full redemption of its outstanding USD $100 million Eurobond, which matures today 3 August 2010. The redemption was preceded by timely payments of all coupon payments.
Pivdennyi issued the Eurobond, their debut notes issue in the international capital markets, in July 2007. BNP Paribas and Standard Bank Plc acted as joint lead managers on the transaction. At launch, the deal was recognized for its tight pricing and diverse distribution across the international investor base.
The timely redemption of Pivdennyi's Eurobond, amidst a challenging global and domestic economic backdrop demonstrates Pivdennyi's reputation as a reliable, stable and financially sound institution within the region.
Pivdennyi is committed to maintaining and developing its sustainable performance and is determined to continue to strengthen investors' confidence in the bank.
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About Pivdennyi
Pivdennyi is a full-service universal commercial bank with corporate clients covering a wide range of industries It is the nineteenth largest bank in Ukraine and the leading bank in the Odessa region with a 20% market share. Pivdennyi's growing branch network today consists of 17 full branches and 140 outlets across 15 regions of Ukraine. With its strong SME business, the bank is becoming a major player in the Black Sea region.
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For additional information, please contact:
Mr. Andrew Dobriy, Head of International Business
E-mail: daa@pivdenny.ua
Tel: +38 0482 307 037
Fax: +38 0482 307 082
