Moody’s upgrades Raiffeisen Bank Aval’s BFSR in Ukraine

Moody’s Investors Service has upgraded the bank financial strength rating (BFSR) of Raiffeisen Bank Aval (RBA) to D from D-. The outlook on the BFSR is stable following the upgrade.

According to Moody’s, the rating action reflects the significant and ongoing improvements in RBA’s risk management processes to levels commensurate with those of its ultimate parent Raiffeisen Zentralbank Oesterreich AG and in line with its very robust franchise, which has been improved on the back of diversification into retail and as a result strengthen name recognition, and strong financial fundamentals to an extent commensurate with D rated banks.

RBA, the largest foreign bank subsidiary in Ukraine, ranks second among  Ukrainian banks in terms of total assets, loans to retail customers and deposits (with market shares of 7-13% on these measures) and also maintains a solid position in the corporate segment. Moody’s believes that the bank is particularly well positioned to grow in retail (where it is particularly strong in the car finance and mortgage segments) and in the SME franchise.

“The entrance of its strategic foreign shareholder in late 2005 turned RBA around, with a positive impact on its lending culture, decision-making processes and business philosophy, resulting in a more conservative and market-oriented institution with credit underwriting standards in line with those of its parent. The change in ownership contributed positively to RBA’s corporate governance with a management comprising a blend of foreign and local professionals,” explained Roman Piven, Assistant Vice President-Analyst and lead analyst for RBA at Moody’s.

The upgrade also takes into account Moody’s opinion that RBA is well positioned to further consolidate its market positions thanks to its enhanced customer reach through the reorganised network of 1,262 branches and outlets across the country against the backdrop of Ukraine‘s increasingly competitive environment.

Raiffeisen Bank Aval is headquartered in Kiev, Ukraine, and as of 31 December 2007 reported total un-audited (under local accounting rules) assets of US$ 8.8 bln and net profit of US$ 116 mln.