Business news from Ukraine

Fitch upgrades ProCredit Bank’s rating

The international rating agency Fitch Ratings has upgraded the VR of ProCredit Bank (Kyiv) from ‘cc’ to ‘ccc-‘ and affirmed its Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘CCC-‘ and its Long-Term Local-Currency IDR at ‘CCC’.

“The upgrade reflects our view of ProCredit Bank’s moderately lower risk of failure, driven by stronger asset quality and profitability due to a less severe operating environment than previously expected,” the agency said in a statement on its website on Friday.

It added that the affirmation of the national long-term rating at ‘AA(ukr)’ with a ‘Stable’ outlook reflects the bank’s continued creditworthiness in the local currency relative to other Ukrainian issuers.

Fitch noted that ProCredit Bank’s IDRs are backed by the support of its parent ProCredit Holding AG & Co. KGaA (‘BBB/Stable Outlook’/bbb).

The agency added that the ‘ccc-‘ shareholder support rating reflects the view of the strategic importance of the Ukrainian bank for the holding, as well as potential limitations on the bank’s ability to use the parent company’s support, in particular, to service foreign currency liabilities.

It is noted that a default on priority foreign currency liabilities remains a real possibility due to the war, however, the bank maintains generally adequate foreign currency liquidity compared to its needs, which is facilitated by various capital and currency control measures introduced since the beginning of the war.

According to Fitch, ProCredit Bank will continue to service its external obligations: at the end of the first quarter of 2023, its external debt stood at a moderate 10% of total funding, consisting of EUR20 million of subordinated bonds and funding from international financial institutions.

The agency noted that the gradual improvement in the operating environment for Ukrainian banks has resulted in a more resilient loan portfolio quality for ProCredit Bank, as well as higher revenues and profitability than previously expected. As a result, although capital risks remain very high, Fitch believes that the bank is now less likely to face a material capital shortfall.

The agency recalled that ProCredit Bank’s asset quality indicators deteriorated sharply after the outbreak of the war, resulting in significant provisioning charges (3.4 times operating profit in 2022). “Risks to asset quality remain elevated and dependent on the outcome of the war, despite an improved operating environment in the first quarter of 2023,” Fitch stated.

It added that the bank earned UAH 211 million in net profit in the first quarter of this year after a net loss of UAH 1.8 billion in 2022, and expects an improvement in provisioning.

It is noted that the bank managed to increase its core capital ratio from 9.6% to 11.7% in the first quarter, but it remains modest.

ProCredit Bank was ranked 15th among 65 operating banks in Ukraine in terms of total assets (UAH 39.21 billion) at the beginning of June. Its net profit for the five-month period amounted to UAH 384.43 million.

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The European Bank for Reconstruction and Development (EBRD) has provide ProCredit Bank (Kyiv) with a four-year amortising senior unsecured loan of up to EUR 25 million equivalent for on-lending to eligible micro, small and medium-sized enterprises (MSMEs).
According to the EBRD’s report to the Interfax-Ukraine agency on Friday, the agreement was signed by EBRD Managing Director for Financial Institutions Francis Malige and Board Chairman of ProCredit Bank Viktor Ponomarenko.
In addition to long-term financing, eligible sub-borrowers will receive technical assistance funded by the EU and grant support in the form of investment incentives upon the completion of their investment projects.
At least 70% of all financed sub-loans are expected to be compliant with EBRD Green Economy Transition (GET) approach.
ProCredit Bank was founded in 2001. Its only shareholder at the beginning of 2021 was ProCredit Holding (100% of shares).
According to the National Bank of Ukraine, as of March 1, 2021, ProCredit Bank ranked 16th in terms of total assets (UAH 27.413 billion) among 73 banks operating in the country.

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ProCredit Bank (Kyi) has completed an increase in the charter capital by 10.4%, or by UAH 147.76 million, to UAH 1.57 billion by attracting additional contributions through placing 310,000 ordinary registered shares of the existing par value, the bank said in the information disclosure system of the National Securities and Stock Market Commission.
The bank recalled that the decision to increase the charter capital was made by the shareholder on August 30, 2019.
ProCredit Bank was founded in 2001. Its only shareholder at the beginning of 2020 was ProCredit Holding (Germany).
According to the National Bank of Ukraine, as of September 1, 2020 in terms of total assets (UAH 27.274 billion) ProCredit Bank ranked 16th among 75 banks operating in the country.



The net profit of ProCredit Bank (Kyiv) through January-June 2019 amounted to UAH 320.998 million, which is 2.6% more than in the same period of 2018 (UAH 312.901 million).
According to the bank’s quarter report posted on its website, its net interest income in the first half of the year increased by 14.6% compared to the corresponding period of 2018, to UAH 606.106 million.
The bank’s assets for the six months increased by 2.3%, to UAH 21.479 billion, loans and customers’ debts by 2.2%, to UAH 16.893 billion.
The liabilities of the bank for this period rose by 0.9%, to UAH 18.175 billion, net worth decreased by 10.8%, to UAH 3.305 billion.
The charter capital in the first half of 2019 remained at the level of UAH 1.424 billion.
ProCredit Bank (formerly Microfinancial Bank) was founded in 2001. Its only shareholder on January 1, 2019 was ProCreditHolding holding 89.3226% of shares.
ProCredit Bank ranked 16th among 77 operating banks in Ukraine as of April 1, 2019 in terms of total assets (UAH 21.663 billion), according to the National Bank of Ukraine.