News

Moody's upgrades Bulgarian Investbank to B2/NP, outlook stable

At the same time, Moody's has affirmed iBank's E+ Bank Financial Strength Rating (BFSR). All ratings carry a stable outlook.

iBank's E+ BFSR reflects its small presence in its local market (with a share of around 1.14% of loans and 2% of customer deposits), low profitability and weak efficiency indicators, high borrower concentration, vulnerability to development risks, challenges from Bulgaria's increasingly competitive environment; and concerns regarding future asset quality, Moody's said in a press release.

On the positive side, the rating also reflects the bank's adequate capitalisation, comfortable liquidity and currently good asset quality levels.

The capital increase completed in September 2007 doubled the bank's Tier 1 capital, in keeping with its balance sheet growth.

The fresh capital injection, which reinstated the bank's free equity (which in 2006 was eroded due to a large investment in its new head office buildings) to more acceptable levels, together with some evidence that iBank's key weaknesses (such as its frail earnings-generating capacity and fragile efficiency ratios) have started to be addressed, led Moody's to asses that its standing within the E+ BFSR range has improved.

In particular, H1 2007 un-audited results indicate that rapid business expansion and a shift in the composition of the balance sheet (and loan book) have resulted in recovering profitability, with RoAA reaching 1.38% compared to 0.41% at YE2006.

Any further upward pressure on the bank's ratings is capped by concerns with regard to the speed of its balance sheet and loan book growth (topping 66% and 77% during H1 2007).

Such rapid growth could result in asset quality problems in the future, particularly as the bank is expanding into new market segments beyond its traditional core focus.(Dnevnik)