Financial news

Ratings review for 31.10.2007

Moody's assigned "B3/NP/E+/Baa3.ua" ratings to «Active-Bank»

International rating agency Moody's Investors Service today assigned to Active-Bank (Ukraine) a B3 rating and Not Prime short-term rating on deposits in foreign currency and national currency and also financial bank strength rating at the level E+.

Moreover, the agency Moody's assigned to the bank the rating on national scale Baa3.ua. The rating on global scale has the outlook «stable», rating on national scale has no special outlook.

According to rating system of the agency Moody's, B3/NP/E+ ratings on global scale depict a possibility of default and the amount of expected losses at global level and Baa3.ua rating on national scale is the estimation of solvency in comparison with other Ukrainian banks.

Agency Moody's considers it to be unlikely that Active-Bank will get a support from the side of its owners or Ukrainian authorities in case of financial difficulties. That is why long-term credit of deposits in national currency B3, assigned to the bank, does not include a possibility that the bank will get an external support.

According to the opinion of the agency, bank financial strength rating at the level E+ depicts bank's market positions which are supported by good connections with Ukrainian group of companies «Ukrpodshipnik» and good financial indexes despite they were achieved due to one-time big deal with the connected parties. Moreover, high concentration of credits which were issued to one borrower which can have negative consequences for liquidity level and capitalisation of the bank, and its limited market positions are key factors making the restricting influence onto bank ratings.

Moody's notes that at the current level the potential of the bank ratings increase is quite limited. Nevertheless, Active-Bank financial strength rating can be increased in case its market positions are strengthened till the level corresponding to bank levels with B2 rating. Ratings increase possibility in future will considerably depend on how successfully it will manage to realize its strategy aimed at retail business and adapt risk-management system to new products. Bank ratings decrease, though seems to be very unlikely, nevertheless, can take place if the following factors occur simultaneously: credit portfolio concentration increase, assets quality indexes decrease and considerable decrease of capital adequacy indexes.

Head Office of Active-Bank is located in Kyiv (Ukraine). As of 31 December 2006 bank total assets made up USD 293 mln., net profit for 2006 — USD 3,1 mln..

RA «Credit-Rating» assigned  "uaBB+" rating to Severodonetsk

Rating agency «Credit-Rating» (Kyiv) assigned long-term credit rating uaBB+ to Severodonetsk (Luhansk region). This is informed in the report of the agency.  uaBB rating means that in case of unfavourable economic circumstances a non-payment risk can occur.

Plus indicates intermediary, relating basic, rating category. The agency also assigned uaBB+ rating to the issue of Severodonetsk municipal council' bonds at UAH 20 mln.

Factors, supporting rating level — basic indexes growth which characterize the level of the town economic development during 2002-2006: industrial products realisation volume, foreign-trade turnover volume, direct foreign investment volumes, housing construction volume, but the level of some indexes in calculation per one resident in 2006 was lower than average index in Ukraine; improvement of basic indexes of the town social development during 2002-2006: decrease of registered unemployment level by 2% in 2006 that is less than average index in the country (2,7%); growth of average month wage level by UAH 1 112,9 in 2006 that is 6,9% more than average index in the country.

Rating level is supported also by decrease of town budget dependency from transfers from budget of other levels, namely, the approved for 2007 evening up grant volume from State budget is decreased in comparison with 2006 on 34,2%; absence of direct debt of Severodonetsk municipal council as of 1 July; significant operational experience of town chairman and town managers majority and also high consolidation level of local authority branches that promotes realization of town development strategic plan.

Factors, limiting rating notch — multisectoral town economy and increased dependency from activity of close corporation «Severodonetsk corporation «Azot»: sales of product volume of the enterprise in 2006 provided 85,6% of total realization volume of the town industrial production; volume of taxes and dues, transfered in 2006 by the enterprise to the town budget, made up 27,8% of revenue section of total town budget fund without transfers taking into account; non-fulfilment in 2006 of town budget targets on the fixed incomes due to non-fulfilment of the plan on income taking from individuals, which share in the volume of revenue of town budget pool without taking into consideration of transfers made up 75,2% in corresponding period; town dependency from official transfers from State budget, in particular, evening up grants, which share in the town budget revenue section made up 9,5% in 2006.

Rating notch is also limited by high level of capital assets depreciation, including housing stock,  objects of engineering infrastructure of the town and necessity to execute considerable capital investments in their renewal; the volume of the planned issue of Severodonetsk municipal council bonds (UAH 20 mln.) exceeds the volume of actual income taking to the town development budget for the last 5 years.

Bonds circulation term — 5 tears
About 140 thousand inhabitants live in Severodonetsk.

Source: Information agency Сbonds