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MESSAGE (ENGLISH VERSION) | |
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Current report no.22/2009
FITCH AFFIRMS POLAND'S BANK ZACHODNI WBK AT
'BBB+'; OUTLOOK NEGATIVE
Fitch Ratings-London/Warsaw-25 September 2009: Fitch Ratings has today
affirmed Poland-based
Bank Zachodni WBK's (BZ WBK) ratings at Long-term Issuer Default (IDR)
'BBB+', Short-term
IDR 'F2', Individual 'C' and Support '3'. The Outlook is Negative. The
Support Rating Floor is
affirmed at 'BB'.
In Fitch's view, the potential support from BZ WBK's majority
shareholder, Allied Irish Banks,
(AIB, rated 'A-'/Stable) can not be relied upon as indicated by the
parent's weak Individual 'D/E'
rating. Therefore, BZ WBK's IDRs are based on the standalone strength of
the bank as indicated by
its Individual rating of 'C'. The Support rating reflects Fitch's view
of moderate probability of
support that could be available for BZ WBK from the Polish state in case
of need.
The IDRs and Individual rating reflect the bank's diversified and strong
funding base, limited
balance sheet mismatches, relatively low exposure to FX-denominated
mortgage loans, and solid,
albeit deteriorating, profitability in 2009 to date. In addition, they
take into account its strong
liquidity and adequate capitalisation, but also concentrations within
the loan book.
The Negative Outlook reflects a less favourable operating environment
resulting in weaker
pre-impairment operating profitability, rising impaired loans and
impairment charges and falling
provisioning coverage. BZ WBK's asset quality deteriorated significantly
with impaired loans rising
to 4.5% of gross loans at end-H109 from a low 2.4% at end-H108, but
remains better than the
sector's average. Exposure to the commercial property sector (32% of
total loans) is a concern and
is largely behind the steep increase of its NPLs. The quality of other
segments of the loan book has
deteriorated as well, albeit at a slower pace. Nevertheless, corporate,
SME and consumer exposures
contributed heavily to impairment charges, equal to an annualised 156bp
of average gross loans in
H109.
Rising risk cost was accompanied by pre-impairment profit falling y-o-y,
due to pressures on
margins, slower growth of business volumes and weaker non-interest
income generation. Although
pre-impairment operating profitability may improve in H209, further
deterioration in asset quality is
likely, especially in the context of rising unemployment. Although the
Polish property market has
shown signs of stabilising in some segments, it is still far from
recovery. Fitch will therefore
carefully monitor the bank's asset quality and exposure to the
commercial property segment in
particular. Should pressures on profitability persist either through
further rises in impairment
charges, weaker pre-impairment profit or a combination of these two
factors, negative rating action
is likely.
BZ WBK is Poland's fifth-largest bank, with 514 branches and around 5%
of sector assets at
end-H109. It is 70.4%-owned by AIB. Core activities are retail and
corporate banking, supported by
leasing, asset management, and brokerage subsidiaries. It also has
stakes in Polish insurance
companies controlled by Aviva, including two joint ventures and a 10%
participation in Poland's
largest pension fund.
Contacts: Artur Szeski, Warsaw, Tel: + 48 22 338 6292; Michal Bryks, +
48 22 338 6293.
Media Relations: Julian Dennison, London, Tel: +44 020 7682 7480, Email:
julian.dennison@fitchratings.com; Peter Fitzpatrick, London, Tel: + 44
(0)20 7417 4364, Email:
peter.fitzpatrick@fitchratings.com; Hannah Warrington, London, Tel: +44
(0) 207 417 6298,
Email: hannah.warrington@fitchratings.com.
Fitch's rating definitions and the terms of use of such ratings are
available on the agency's public
site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this
site, at all times. Fitch's code of conduct, confidentiality, conflicts
of interest, affiliate firewall,
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