Results of Oschadbank’s sustainability assessment in 2019

In 2019, the Bank's sustainability assessment was carried out. During the first stage of the analysis, an independent international auditor KPMG confirmed the Bank’s credit risk calculation accuracy and identified the necessity of insignificant adjustment by UAH 256 mn upwards. During the second stage, the National Bank conducted stress testing by two macroeconomic scenarios – baseline and adverse.

It is important to note that stress testing is a forecast calculation of the impact of external negative factors on bank’s capital adequacy to cover potential risks resulting from their simultaneous realization. That is not the actual state of the bank, but only the possible predicted result of the implementation of a hypothetical negative scenario. As a result of the NBU’s stress test, the estimated capital deficit as of 1 January 2019 amounted to UAH 13.5 billion under the baseline scenario and UAH 28.2 billion under the adverse macroeconomic scenario.

At that, it should be mentioned that the NBU’s calculations of the adverse scenario envisaged the estimated exchange rate at UAH 37 as of end 2019, which is 1.5 times higher than the actual one.

Considering the conclusions of the sustainability assessment, Oschadbank elaborated and submitted the Restructuring Plan for 2019 to the NBU, aimed at the improvement of the Bank’s assets quality among other things. At the same time, during the year, Oschadbank took active measures that helped to reduce the estimated deficit under the adverse macroeconomic scenario by UAH 7.1 billion to UAH 21.1 billion.

Oschadbank submitted to the NBU a restructuring plan in due time, which was approved by the Management Board and Supervisory Board. The updated restructuring plan was agreed at the National Bank’s Board level, it addresses the recommendations of the regulator and provides for covering the capital deficit even in the adverse macroeconomic scenario for account of internal sources of capital generation.