Moody's Upgrades Unibank's Ratings Due to Improving Loan Book Quality and Profitability

Unibank OJSC's loan book quality and profitability have shown significant improvement over the last two years, leading Moody's Investors Service to upgrade the bank's long-term local and foreign currency bank deposit ratings to B1 from B2. The upgrade follows a reduction in problem loans (PLs) and improved provisioning coverage, resulting in a decline in the PL ratio to 3.2% as of year-end 2024 from 18.9% in 2022. Unibank's profitability has also improved, with a return on tangible assets of 2.3% in 2024 compared to 1.4% in 2023 and 1.1% in 2022.

Key Takeaways:

• Unibank's BCA and Adjusted BCA were upgraded to b2 from b3 due to a significant improvement in loan book quality and profitability.
• The bank's problem loan ratio decreased to 3.2% as of year-end 2024 from 18.9% in 2022.
• Problem loan coverage improved to 88% from 43% over the same period.
• Unibank's profit margin and fee and commission income are expected to continue improving in the next 12-18 months.
• The bank's capital adequacy remains modest, with a TCE/RWA ratio of 10.2% compared to 10.4% in 2022.
• Unibank relies on customer deposits, with a share of market funding at 12% of tangible assets as of year-end 2024.
• The bank maintains a healthy liquidity cushion at 31% of total assets as of year-end 2024.

Statistics:

• 3.2% - Unibank's problem loan ratio as of year-end 2024.
• 18.9% - Problem loan ratio in 2022.
• 88% - Problem loan coverage as of year-end 2024.
• 43% - Problem loan coverage in 2022.
• 10.2% - TCE/RWA ratio as of year-end 2024.
• 10.4% - TCE/RWA ratio in 2022.
• 12% - Share of market funding in 2024.
• 9% - Share of market funding in 2022.
• 31% - Liquidity cushion as a percentage of total assets as of year-end 2024.

Sources:

• Moody's Ratings, "Unibank OJSC: Moody's Ratings Upgrade" (February 10, 2023).
• Moody's Investors Service, "Banks" (November 2024), available at https://ratings.moodys.com/rmc-documents/432741.