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Fitch affirms state banks' IDRs at 'B,' upgrades Ukreximbank's VR to 'b-'

KYIV. Oct 13 (Interfax-Ukraine) – The international rating agency Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDRs) of state-owned PrivatBank, Oschadbank, Ukreximbank and Ukrgasbank at "B" with a positive outlook.

Ukreximbank’s Viability Rating (VR) was upgraded to "b-" from "ccc +," while Oschadbank and Ukrgasbank were affirmed at "b-" and PrivatBank at "b," the agency said on Wednesday.

In addition, Fitch has upgraded Ukreximbank’s eurobonds from "CCC-" to "CCC."

The VR upgrade reflects moderately reduced pressure on Ukreximbank’s vulnerable capital position. This is driven by material improvement, lower encumbrance of the bank’s equity by net impaired loans and slightly reduced exposure to market risk.

Overall, Fitch positively notes the increase in profitability of Ukrainian banks in the first half of this year.

In the case of Ukrgasbank, the agency points that Ukrgasbank’s loan book is concentrated on the renewable energy sector – 21% of gross loans. According to Fitch, loans to renewable energy producers were restructured due to delayed payments in Q1-Q3, 2020 from NPC Ukrenergo. "Despite significantly improved monthly settlements by the state company since August 2020, overdue receivables remain outstanding and delays to contractual payments in the medium term cannot be ruled out," the agency says, at the same time considering the issue of the bank’s formation, in case of need, of additional reserves to be manageable.