On 9 June 2017 Fitch Ratings has affirmed the Long-Term Foreign Currency Issuer Default Ratings (IDRs) of Credit Agricole Bank at 'B-' with Stable Outlook.
«Credit Agricole Bank reaches the best rating a bank could receive in Ukraine due to the level of country rating, both in terms of viability rating and final rating. The upgrade of viability rating is a recognition of the strength of the bank in absolute and relative terms, as Fitch stresses in its press release», Régis Lefèvre, Member of the Management Board, Financial Director of Credit Agricole Bank comments.
Main extracts from Fitch press release:
Credit Agricole Bank's 'B' VR reflects the bank's stronger standalone creditworthiness than peers'. It is supported by the bank's more balanced business model, benefitting from access to cheap (by market standards) and stable client funding, and a focus on lower-risk lending segments (multinational clients, better performing agro producers, car loans in retail) resulting in more resilient financial metrics. The VR upgrades also consider improved loss absorption capacity following continued resilience in operating performance of Credit Agricole Bank that allowed for stronger coverage of problem assets and more comfortable capital cushions.
As mentioned in the official press release by Fitch, the affirmations of Credit Agricole Bank's 'B-' Long-Term Foreign Currency IDRs reflect the constraint of Ukraine's Country Ceiling of 'B-', which captures transfer and convertibility risks and limits the extent to which support from the shareholders of the bank can be factored into the ratings. The Stable Outlook on the Long-Term Foreign Currency IDRs of Credit Agricole Bank is in line with that on the Ukrainian sovereign. The Long-Term Local Currency IDRs of Credit Agricole Bank at 'B' also take into account country risks. The Stable Outlook on the Long-Term Local Currency IDRs of Credit Agricole Bank reflects Fitch's view of the likely evolution of these risks.
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 Currency IDR: affirmed at 'B'
- Short-Term Local Currency IDR: affirmed at 'B'
- Support Rating: affirmed at '5'
- Viability Rating: upgraded to 'B' from 'B-'
- National Long-Term Rating: affirmed at 'AAA (ukr)'; Outlook Stable
Credit Agricole Bank's non-performing loans (NPLs, loans more than 90 days overdue) stood at 14.5% of loans at end-2016, and performing restructured loans were at 10.5% (end-2015: 15% and 12%, respectively). Impaired loans (NPLs plus restructured) were comfortably (74%) covered by impairment reserves; however, the unreserved portion of these amounted to a significant 50% of Fitch Core Capital (FCC). Loss absorption capacity is underpinned by solid pre-impairment profitability (equal to 10% of average gross loans for 2016), and a capital buffer is also available to absorb additional credit losses (FCC ratio of 12.7%). Credit Agricole Bank reported a solid 36% return on average equity (ROAE) in 2016 (2015: 27%).
The IDRs of Credit Agricole Bank could be upgraded if Ukraine's sovereign ratings are upgraded and the Country Ceiling revised upwards, and downgraded in case of a sovereign downgrade.
About Credit Agricole:
PJSC «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 bank 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 VIP 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.
Viktoriia Torianyk, Head of PR and corporate communications Credit Agricole Bank.
Phone: +38 044 581 07 45, e-mail: Viktoriia.Torianyk@credit-agricole.ua