Moody's assigns B1 Deposit Ratings to Bulgaria's Fibank

Мoody's Investors Service said on Tuesday it has assigned first time B1 long-term local and foreign currency deposit ratings to Bulgaria's First Investment Bank (Fibank), аccording to their website. 

"The deposit ratings reflect the bank's b2 standalone Baseline Credit Assessment (BCA) and one notch of uplift reflecting Moody's expectation of a Moderate likelihood of support from the government of Bulgaria (Baa2, stable) in case of need," the rating agency said in a statement.

The outlook on the long-term deposit ratings is stable.

The moderate support assumption reflects Fibank's systemic significance as the third largest bank in Bulgaria.

FiBank has strong income generation as indicated by its 3.6% ratio of pre-provision income to risk weighted assets as of December 2016 and 0.8% return on assets. Income streams are relatively diversified and Moody's expects the bank's efficiency to remain broadly in line with peers. The rating agency also expects the bank's credit costs to stabilise at around 1.5%.

The rating agency expects FiBank to maintain its deposit-based funding structure and sizeable liquidity buffers. FiBank is funded by, predominantly retail, deposits as indicated by its ratio of average due to customers' to average funding which was 96% as of December 2016. The bank's ratio of liquid assets to tangible banking assets was a sizeable 28% as of December 2016.

Moody's expects that the bank's asset quality will improve gradually driven by write offs and the improving operating environment which supports the bank's restructuring efforts. Nevertheless, FiBank has a high level of problem loans, with the ratio of NPE's to gross loans at 24.4% as of December 2016 and the ratio of 90 days or more past due loans at 17.5%. The...