[size=75:2yn9wp1l]novinite 7 April 2010

Fitch Affirms Bulgaria's Unicredit Bulbank Support Rating

Fitch Ratings has affirmed Unicredit Bulbank's (UCB) Support Rating at '2', the agency announced.

UCB's Support Rating is constrained by Bulgaria's country ceiling 'BBB+'. Therefore, any upside/downside in the Support Rating would be linked to a change in the country ceiling.

The rating reflects the high probability of support, should it ever be required, from Unicredit Bulbank's ultimate shareholder, Unicredit S.p.A, which owns a 92.1% take in UCB, held indirectly through its 96.3%-owned subsidiary, UniCredit Bank Austria AG, the agency points out.

UCB reported net income of BGN 197.4 M in 2009, down 30% year-upon-year, due to slower loan growth amid a slowdown in the Bulgarian economy, tightening net interest margins and higher loan impairment charges due to worsening asset quality.

Fitch, however, notes that the bank's reported loans in arrears over 90 days/gross loans of 4% at end-2009 (up from 1.8% a year ago), remains below the sector average of 6.4% at end-2009.

Given an operating environment that remains challenging for banks in Bulgaria, Fitch expects continued pressure on UCB's profitability and on asset quality.

UCB is the largest bank in Bulgaria by total assets, with a market share of about 16% at end-2009. It has a nationwide network of 234 branches and serves about 1.1 million clients.