Maribor, 18 May (STA) - After lowering the long-term credit rating of Slovenia's second biggest bank, NKBM, Fitch Ratings has also lowered the long-term credit rating of Probanka, a small Maribor-based private bank, from BB to BB-. The other ratings remain unchanged, the bank said in a press release on Wednesday.
The international rating agency explained its decision with the extensive amount of bad loans and weak profitability, which weaken Probanka's capital strength.
The share of bad loans, when borrowers are more than 90 days in default on their loan agreements, surged form 6.5% at the end of 2009 to 14% at the end of last year.
A further problem as pointed out by Fitch Ratings is that a large portion of loans is limited to a small group of borrowers, which increases risks.
The rating agency also notes the loans are largely secured by means of real estate and securities that are more or less illiquid at the moment.
Fitch in addition highlights the bank's moderate liquidity, while quoting its regional presence and the Slovenian economy's return to moderate growth as positive aspects.
Probanka had EUR 1.847bn in total assets in 2010, having raised its market share from 2.48% to 2.57% last year. Net financial and operating revenues were up 6% to EUR 34.3m and pre-impairment profit rose 10% to EUR 17.5m.