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Fitch Ratings has revised the outlooks on seven Ukrainian banks to stable from positive and affirmed their Long-Term Issuer Default Ratings (IDRs), the agency said on its website.
"The affected banks are: Oschadbank, Ukreximbank, PrivatBank, Ukrgasbank, Credit Agricole Bank, ProCredit Bank, and Pravex-Bank," it said.
"Fitch has also revised the outlook on First Ukrainian International Bank's (FUIB) Long-Term IDR to negative from stable and affirmed the IDR at 'B'," the report says.
"The rating actions follow Fitch's revision of the outlook on Ukraine's sovereign rating to stable from positive in light of the anticipated adverse impacts of the COVID-19 pandemic. Fitch expects the Ukrainian economy to contract by 6.5% GDP in 2020, compared with 3.2% growth in 2019, before recovering by 3.5% in 2021. The economic policy response, including increased social spending and the formation of a coronavirus fund (1.6% of GDP), could help to soften the economic shock. However, there are material downside risks to our baseline forecasts, given the uncertainty around the extent and duration of the coronavirus crisis," Fitch said.
"We have revised the sector outlook for Ukrainian banks to negative from stable as we expect that the economic downturn, weaker client activity, lower household incomes (due to higher unemployment and lower remittances) and exchange-rate pressures (the hryvnia has depreciated by 11% since the beginning of March, while Fitch forecasts depreciation of 25% for FY20) will increase performance pressures for banks. We expect that provision of additional liquidity to banks, as announced by the central bank, and temporary regulatory forbearance should help banks manage problem loans and solvency ratios in local accounts, reducing the risk of capital breaches. However, we believe that the risks to banks' credit profiles have significantly increased," Fitch expert stated.
"The stable outlooks on the IDRs of seven banks are in line with that on Ukraine's sovereign and capture the potential support from their respective state (Oschadbank, Ukreximbank, PrivatBank, Ukrgasbank) or foreign shareholders (Credit Agricole Bank, ProCredit Bank, and Pravex-Bank) and Fitch's perception of Ukraine's country risks. FUIB's IDR is driven by its standalone creditworthiness, as reflected by its 'b' Viability Rating, and the negative outlook reflects Fitch's expectation of the near-term pressures on the bank's financial profile due to the economic shock," according to the document.
Source: www.en.interfax.com.ua
