... AD's (UBB) Issuer Default Ratings (IDRs) are driven by its standalone financial strength, expressed by its Viability Rating (VR). The VR is underpinned by the bank's moderate risk appetite, substantial capital buffers, solid pre- impairment profitability, deposit-based funding and ample liquidity. However, it also reflects UBB's very high legacy impaired loans and a difficult operating environment. The Stable Outlook on UBB's Long-Term IDR indicates that risks to its credit profile are balanced. Weak Asset Quality: UBB's loan book quality could gradually improve if the bank continues its portfolio cleaning process, which accelerated in 2015. The inflow of new bad debts should remain contained given the bank's selective lending approach, modest expansion plans and already seasoned legacy loans. At end-3Q16, UBB's high impaired loans (about 30% of total gross loans; sector average: 19%) were concentrated in legacy commercial and residential...
