...Viability-Driven IDRs: United Bulgarian Bank AD's (UBB) Issuer Default Ratings (IDRs) are driven by its standalone financial strength, as expressed by its Viability Rating (VR) of `b'. UBB's VR reflects improving but weak asset quality given slow progress in resolving its large stock of legacy non-performing loans (NPLs). However, UBB has reasonable capitalisation (Fitch Core Capital (FCC) ratio: 26% at end-3Q15) and satisfactory pre-impairment profitability, which would act as a buffer against any additional provisioning costs. It also reflects the bank's good liquidity profile and stabilised customer deposit base. Weak Asset Quality Drags: UBB reported International Financial Reporting Standards (IFRS) impaired loans at a high 33% of total gross loans at end-3Q15 (bank standalone). This headline asset-quality ratio improved slightly in 2015, further to the bank's first material write-offs (5% of end-2014 gross loans). Further write-offs and intensified recovery actions would be positive...
