Fitch Ratings has affirmed Credit Agricole Bank’s status as one of the highest rated local issuers

On May 23^d 2019 Fitch Ratings has affirmed the Long-Term Foreign Currency Issuer Default Ratings (IDRs) of Credit Agricole Bank at 'B-' with Stable Outlook. The National Long-Term Ratings was affirmed as 'AAA (ukr)' also with Stable Outlook.  

“Fitch again confirmed Credit Agricole Bank’s status as one of the highest rated issuers in Ukraine with impeccable reputation. Moreover, high ratings also confirm the correctness of the chosen bank’s strategy. The bank is confidently moving to new powerful results due to its sufficient level of capitalization and high liquidity ratios”, - Giorgio Sopranzi, Member of the Management Board, Financial Director of Credit Agricole Bank, comments.        

Main extracts from Fitch press release:        

The National Long-Term Ratings of 'AAA (ukr)' reflect Credit Agricole Bank’s status as one of the highest rated local issuers. Credit Agricole Bank is fully owned by Credit Agricole S.A. (A+/Stable).  

The Long-Term Foreign-Currency IDRs of 'B-' and SRs of '5' reflect the limited extent to which institutional support from Credit Agricole Bank foreign shareholders can be factored into the ratings because of Ukraine's high transfer and convertibility risks as captured by the Country Ceiling of 'B-'.

The Long-Term Local-Currency IDRs of 'B', one notch above their Long-Term Foreign Currency IDRs and the sovereign rating, take into account the slightly more limited impact of Ukraine's country risks on the issuers' ability to service senior unsecured obligations in the local currency, hryvnia, than in foreign currency.    

The ratings of Credit Agricole Bank are as follows: 

• Long-Term Foreign-Currency IDR: affirmed at 'B-'; Outlook Stable
• Long-Term Local-Currency IDR: affirmed at 'B'; Outlook Stable
• Short-Term Foreign- and Local- Currency IDRs: affirmed at 'B'
• National Long-Term Rating: affirmed at 'AAA (ukr)'; Outlook Stable
• Viability Rating: affirmed at 'b'
• Support Rating: affirmed at '5'

Fitch has further affirmed Credit Agricole Bank VR at 'b' due to limited changes in the bank's credit profile since the last review. Credit Agricole Bank VR of 'b', one notch above Ukraine's sovereign rating, reflect it’s relatively strong (in the local context) financial profile due to long records, meaningful franchise, low impaired loans, sound capital positions, robust through-the-cycle performance, as well as ordinary benefits of shareholder support.     

Credit Agricole Bank reasonably conservative underwriting standards have resulted in relatively low generation of impaired (IFRS 9 Stage 3) loans, at 8% of loans at the bank at end-1Q19 with loan loss allowances held against these loans. The bank’s asset-quality metrics experienced volatility in a market stress situation in the past but their strong loss absorption capacity allowed impaired loans to be written off quickly.        

Capitalisation for the bank has strengthened further due to moderate risk-weighted assets (RWA) growth. The Fitch Core Capital (FCC) was 17% of RWA at Credit Agricole Bank at end-1Q19. Capitalisation was further supported by strong performance results, with return on average equity at a high 40% at Credit Agricole Bank in 2018.     

Funding and liquidity profiles of the bank benefit from a low share of wholesale debt funding in the liabilities and high liquidity coverage. Liquid assets, comprising cash, short-term investment-grade bank placements and local-currency central bank notes, net of 2018 wholesale debt repayments, were a high 28% of total liabilities at Credit Agricole Bank.    

RATING SENSITIVITIES

The IDRs and SRs could be upgraded if Ukraine's sovereign ratings are upgraded and the Country Ceiling is revised upwards, and downgraded in case of a sovereign downgrade. The bank’s VRs could come under downward pressure if additional loan impairment recognition undermines capital positions without sufficient support being made available. Upside potential for VRs is currently limited.  

About Credit Agricole: 

JSC «Credit Agricole Bank» is a modern universal bank owned by the leading financial group in Europe – Credit Agricole Group (France). The Group is a major partner of the French economy and one of the largest banking groups in Europe. It is a leading retail bank in Europe, having the largest portfolio of assets under management, being first in the field of ban insurance and third - in project financing in Europe. Credit Agricole has been operating in the financial market of Ukraine since 1993 and renders the entire range of banking services to private individuals, including premium-clients, and business. The bank pays special attention to cooperation with agricultural enterprises. Reliability and business reputation of Credit Agricole in Ukraine is confirmed by the highest possible FITCH ratings, leading positions in bank sustainability, bank deposit reliability and bank profitability rankings, as well as by 300 000 active private and 18 000 corporate customers, including international corporations, large Ukrainian companies and representatives of small and medium business. Credit Agricole Bank is a socially responsible bank that confirms its status by the large number of projects implemented under the Corporate Social Responsibility program «We Care!». 

Contacts: 

PR and corporate communications division of Credit Agricole Bank. 

E-mail: Communications@credit-agricole.ua