Interest in First Investment Bank has always been high over the years. The reasons for this have always been many and varied. For example, that this is one of the largest banks in the country – the fifth in terms of assets, that this is the largest bank with Bulgarian capital, that this was the bank with which Bulgaria’s accession to the EU Banking Union and hence in the two-year currency exchange mechanism ERM II.
Well, it did not fall into the group of systemically important banks designated by the ECB to come under its direct supervision. But this fact, at least for now, has not stopped Fibank’s efforts to continue investing in increasing its stability. These efforts led to the confirmation of her rating “B” with a negative outlook by the international agency Fitch Ratings – a level that was awarded in November 2020.
By the way, within a year of the beginning of the crisis, the agency has confirmed the ratings of most Bulgarian banks, maintaining their negative outlook. And this is no accident. Due to the crisis, aggravated by the highly unstable business environment due to COVID-19, the rating agency is extremely conservative in its assessments both in terms of loan portfolios and the prospects for increasing the profitability of banks in Bulgaria. It is true that those owned by large foreign banks have a higher rating level than those of private banks with Bulgarian capital. We must not forget, however, that one of the reasons for this is the possibility of financing by parent banks, which is cheaper than attracting local resources and the security of obtaining the necessary liquidity if necessary. This is explicitly stated in the reports of the rating agencies.
But back to Fibank. The Fitch report highlights the need for the bank’s management team to continue its efforts to increase its profitability as a source of capital increase and credit risk reduction. It is true that the expectations of the rating agency are not optimistic regarding the implementation of the first task. But the bank’s results for both 2020 and the first quarter of 2021 say otherwise. According to BNB data, the bank’s profit at the end of March 2021 – BGN 12.96 million – is nearly BGN 3.5 million more (growth of nearly 37%) compared to the reported year earlier – BGN 9.46 million.