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Moody's changes outlook on Pivdennyi Bank's B2 ratings to stable from negative (Ukraine)

October 26, 2010 | Cbonds-Ukraine

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 Ban k 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).

Company: Pivdenny Bank

Full company namePublic Company Bank "Pivdenny"
Country of riskUkraine
Country of registrationUkraine
IndustryBanks

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