Fitch also upgrades Fibank

The international rating agency Fitch Ratingshas upgraded theLong-TermIssuer Default Rating (IDR) of First Investment Bank AD (FIBank) to 'B' from 'B-' and its Viability Rating (VR) to 'b' from 'b-'. The Outlook on FIBank’s Long-Term IDR is Stable.

The upgrade of the bank’s ratings is driven by the stabilisation of its asset quality, improvements in profitability and capitalisation and a moderation of the bank’s risk appetite.

The upgrade ofFIBank’s VR reflectsthe stabilisation ofthe bank’sasset quality metrics and the improvements in the risk management framework, including consistent application of loan classification criteria in line with the highest international industry standards. In this respect, First Investment Bank is developing a long-term partnership with the International Finance Corporation (IFC)aimed at more effective corporate governance and risk management.

The VR is also supported by the bank’s stable funding based on granular retail deposits and good liquidity position. As of the end of Q1 2017, the bank ranked third in the retail deposit segment with borrowings of BGN 6.3 billion, while its liquid assetratio amounted to the sizeable 28%.

Fitch points out that the bank has returned to operating profitability based on recurring revenues in 2016 supported by a strong net interest margin, reasonable cost efficiency (49% cost/income ratio) as well as more moderate impairment charges. For 2016, Fibank reported a profit of BGN 266 million before provisions and taxes.

The improved profitability of the bank serves as an indication to Fitch analysts that operating profit is likely to continue to be supported by contained impairment charges driven by the improved economic environment.

According to preliminary reporting data, as of June 30, 2017 First Investment Bank's profit before impairment and taxes amounted to BGN 82 million, and the net profit was BGN 40 million. For the first six months of 2017,the net interest income was BGN 124 million, and the net fee and commission income – BGN 49 million.

On July 4, 2017the international rating agency Moody’sassigned to FibankB1long-term deposit ratings,stable outlook.