Rating of banks of Ukraine in terms of reliability for 2016

The ratings of Ukrainian banks are compiled quarterly and by the end of the year. On its basis, one can trace the most important trends in the evolution of the financial market, identify the most successful and problematic companies. According to the final results for 2016, the best indicators are demonstrated by organizations supported by foreign capital. Among the 50 largest financial institutions of the country the most reliable is "Credit Agricole Bank".

Analysis of the situation

Terms of work on the Ukrainian banking market for the past 2 years are very tough. This fact was influenced by three things. First, the state's loss of control over a part of the territory led to a loss of control by the banks over a portion of borrowers and mortgages. On average, this is 15-20% of the total loan portfolio.

Secondly, the devaluation of the hryvnia more than 3 times made foreign currency loans almost unrealistic. Even for those borrowers who want to repay them. As of the end of 2016 (according to the information of the National Bank of Ukraine), 47.8% of all loans are foreign currency. This is the equivalent of 327 billion hryvnia. These funds should help banks to return the equivalent of UAH 404 billion in deposits in foreign currency.

Thirdly, the decline in the real economy (even in hryvnia) and the growth of unemployment have a negative impact on loans.

Leverage Effects

In these conditions, the main factors affecting the reliability of banks are:

• The desire of shareholders to stimulate the work of the organization through investment (which involves risk).
• The desire of the National Bank of Ukraine to invest to save banks.
• The ability to do this.

The larger the bank, the higher the desire to help it, but the more funds will be required for financial recovery.

Large foreign banking groups

So far, these are the most reliable banks in Ukraine, which have proved themselves the best in the national market. The following institutions belonging to the European groups are very strong: Raiffeisen Bank Aval, UkrSibbank (BNP Paribas), OTP Bank, Credit Agricole Bank, Kredobank (PKO BP), ProCredit Bank, Pravex Bank "(Intesa)," Idea Bank "(Getin).

However, even in this group there is a weak point: almost all European institutions want to sell their Ukrainian assets. In the past, the sale to Ukrainian or Russian owners already led to bankruptcy in a few years. For example, it happened with such troubled banks of Ukraine as "Forum" and "Kreditprombank".

However, specialists do not take into account 4 financial companies that provide services only to large corporate clients: ING, City, Deutschebank, SEB. Credit Europe Bank (part of the group registered in the Netherlands, owned by individuals - citizens of Turkey) also serves small and medium-sized businesses, but not individuals.

Risk factors

The rating of Ukrainian banks owned by foreign companies is affected by the problems of the country of origin. This primarily concerns organizations from Russia, Greece and Cyprus. Russia is under international sanctions, suffers from a sharp drop in energy prices and the devaluation of its own currency. Greece has been in the economic crisis for 10 years already and introduced in the summer of 2015 very serious restrictions on banking operations for its citizens. Cyprus in 2013 conducted a "reorganization" of deposits in the two largest banks of the country, replacing part of the funds of depositors with shares that are almost worthless.

Therefore, the possibility of banks from these countries to help their Ukrainian units in the future raises questions. A complete list of banks with Russian capital: Ukrsotsbank, Prominvestbank, Sberbank of Russia, Alfa Bank, VTB Bank, Vieste Bank, and Forward. Institutions from Greece and Cyprus include: Universal Bank, Piraeus Bank MKB, Marfin Bank.

The main motivation for these banking groups - to maintain their own reputation in the markets of Central and Eastern Europe - allows setting lower deposit rates compared to local banks. The bankruptcy of the Ukrainian "daughter" can destroy this reputation.

Banks of Ukraine

State-owned Ukrainian banks are not in the best shape. However, the government and the National Bank are trying to support them in every possible way. During 2015, the state invested almost 20 billion hryvnia in the authorized capital of Oschadbank, Ukreximbank and Ukrgasbank, and already in the first quarter of 2016, more than 14 billion hryvnias were sent.

The highest rating of Ukrainian banks belonging to private capital from the following groups: BNP Paribas, Credit Agricole, PKO BP (Kredobank). Their credit rating is investment: A1-A3 (the highest average level).

The high level of reliability is held by Intesa (Pravex Bank) and Raiffeisen banking groups, whose credit rating is also investment: Baa1-Baa2 (below average). The positions in the rating of Ukrainian banks from OTP and Procredit are quite high. A positive point is the investment credit rating of Procredit at the level of BBB (equivalent to Baa2). The credit rating of OTP is below the investment grade Ва2, ВВ +.

List of the most reliable banks

The list of banks in Ukraine is headed by "Credit Agricole Bank". For a long time this position was held by UkrSibbank. The top ten financial organizations are as follows:

• The highest level of reliability among companies Credit Agricole (1 place), Raiffeisen Bank Aval (2) and Oschadbank (3).
• High level is demonstrated by Kredobank (4) and Ukreximbank (5).
• In the middle of the first ten: UkrSibbank (6), Citibank (7) and ProCredit Bank (8).
• Sufficient level of reliability in UkrGazBank (9) and UkrSotsBank (10).

Trends

Private Ukrainian banks for the past 8 years are hopelessly behind. As of 01.01.2015, according to the data of the NBU, among the largest institutions, Delta Bank (now bankrupt) ranked 4th in terms of assets, Nadra Bank - 11, Finance and Credit - 13. Now among the group of 14 largest banks only two Belong to private Ukrainian shareholders. 100% of bankruptcies of the last 10 years are private Ukrainian banks.