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Ukreximbank reports improved profit on halved provisioning in 1H17

Ukraine’s State Export-Import Bank (Ukreximbank, EXIMUK) reported a UAH 736 mln bottom line in 1H17 (after UAH 1,325 mln in losses a year ago), according to its interim report. The improvement was the result of a 56% yoy drop in loan loss provisions to UAH 1,068 mln. At the same time, the company’s key revenue indicators decreased in 1H17: net interest income fell 9% yoy to UAH 1,501 mln as a result of interest income dropping 13% yoy and interest costs sliding 14% yoy. Its net commission income fell 16% yoy to UAH 291 mln.

 

Ukreximbank’s net loan portfolio climbed 1% UTD to UAH 56.8 bln and remained at about 55% of its gross loan portfolio. Its securities portfolio increased 2% YTD to UAH 73.7 bln – mostly due to a larger state bonds portfolio, which also rose 2% YTD to UAH 72.1 bln. Gross loans to state companies amounted to 19.9 bln, or 19% of the total. The bank’s total assets rose 5% YTD (to UAH 168.4 bln), mostly due to an increased cash balance, which improved 57% YTD to UAH 25.2 bln.

 

The bank’s deposit base improved 5% YTD to UAH 89.9 bln, while its biggest depositor (probably the State Grain Corporation) held UAH 27.6 bln at the bank’s accounts, or 31% of the bank’s total deposits. The bank’s total equity surged 2.6x YTD to UAH 14.1 bln (on a positive bottom line and the state’s contribution into equity) and its CAR (Basel) improved to 23.6% as of end-1H17, up from the risky level of 9.5% at the year’s start.

 

Alexander Paraschiy: The good news is that the bank remains cash-rich, but its reduced net interest income looks worrying. Theoretically, the bank might decrease its interest costs by partially repaying its Eurobonds ahead of schedule. Currently, its Eurobonds are the most expensive source of funding bearing 9.5% interest in 1H17, compared to about 7.3% for deposits (except the Grain Corporation) and 5% for borrowings from other banks.

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