Bank Pivdenny Publishes the Results of the Sustainability Assessment (Stress Testing) by the National Bank of Ukraine in 2018

14/ 01/ 2019

Bank Pivdenny successfully passed the sustainability assessment (stress testing) conducted by the National Bank of Ukraine (NBU) in 2018. Bank Pivdenny has fulfilled all requirements of the regulator based on the assessment results. The audit confirmed that the Bank has high quality assets, proper capital adequacy and valid financial statements. In September 2018, Bank Pivdenny fully compensated the estimated capital requirement according to the baseline scenario. In October 2018, the need for capital, calculated by NBU under adverse scenario, was almost fully compensated (93%).

According to the Resolution of the Board of the National Bank of Ukraine as of December 22, 2017 No. 141 “On Approval of the Regulation on the Evaluation of the Sustainability of Banks and the Banking System of Ukraine”, Bank Pivdenny publishes the results of the sustainability assessment conducted as of January 1, 2018.

The assessment of sustainability (stress testing) of the largest Ukrainian banks was conducted in three stages with the involvement of an independent auditor based on the technical specification of the National Bank of Ukraine. At first, the independent auditor assessed the quality of banks’ assets and the acceptability of collateral for credit operations. The audit confirmed that Bank Pivdenny’s financial statements do not require adjustments, and the regulatory capital is sufficient.

Then NBU conducted stress testing* of Ukrainian banks according to the two macroeconomic scenarios – the baseline and the adverse one. Stress testing included the calculation of the influence of negative factors on the capital adequacy of the banks to cover risks. The capital requirement calculated by NBU under the baseline scenario should have been compensated by the end of 2018. The additional capital calculated for the adverse scenario should be compensated until the end of 2019.

As of the end of 2018, Bank Pivdenny fulfilled all requirements of the National Bank of Ukraine regarding the target level of capitalization.

The additional capital requirement under the baseline scenario (UAH 33 million) was compensated in September 2018 by attracting an additional subordinated debt in the amount of USD 1.2 million.

The capital requirement under the adverse scenario (UAH 2 280 million) was almost fully compensated as of October 1, 2018 by improving the quality of assets and increasing the bank’s capital. These measures have reduced the need for capital by UAH 2 111 million. The remaining capital requirement for UAH 169 million will be offset by the end of 2019 by repaying foreign currency loans according to the schedule agreed with the National Bank of Ukraine.

Bank Pivdenny remains committed to minimizing credit risks and increasing the level of capitalization. In November 2017, the bank increased its authorized capital by UAH 130 million due to additional contribution from shareholders. Since the beginning of 2018, the loan portfolio in foreign currency has been reduced by USD 49 million (by 12.5%). This has led to a significant reduction in exchange rate risks, which were the main reason for additional capitalization required by the National Bank of Ukraine after the stress testing.

The high level of profitability allowed the bank to achieve a significant increase in the regulatory capital adequacy ratio from 10.4% to 11.8% (with a regulatory minimum requirement of 10%).

In December 2018, Moody’s has upgraded Bank Pivdenny’s risk assessment rating to B3 from Caa1. The long-term deposit rating has also been upgraded from Caa2 to Caa1 with a “stable” outlook.  Moody`s has also upgraded the Bank’s baseline credit assessment from Caa2 to Caa1 along with the sovereign rating of Ukraine. Caa1 is the maximum possible credit rating for a Ukrainian bank with the country’s current sovereign rating.


Bank Pivdenny is a universal Ukrainian bank, founded in 1993, headquartered in the city of Odessa. The Bank offers a wide range of services for corporate clients and individuals through a wide regional network, which as of December 2018 included 95 branches in 18 regions of Ukraine.

Bank Pivdenny’s net profit for the first 9 months of 2018 amounted to 186.1 million UAH, which is three times higher YoY.

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