Oschadbank most efficient in work with NPLs in 2018

Ukraine’s Finance Ministry addressed the progress of
the four state banks in dealing with NPLs in 2018 in a report released on Feb.
28. Regular reporting on state bank’s NPLs is part of Ukraine’s commitments to the IMF
(one of several structural benchmarks) under the new stand-by loan program.
According to the report, the four banks cut the amount of their overdue loans
by UAH 4.88 bln in 2018 (by collecting money from debtors through foreclosure
and/or sale of pledged assets), including a UAH 2.96 bln reduction by
Oschadbank (OSCHAD) and UAH 0.41 bln contraction by Ukreximbank (EXIMUK). The
banks restructured UAH 20.91 bln in bad loans in 2018, including UAH 16.03 bln
by Oschadbank (OSCHAD) and UAH 0.23 bln by Ukreximbank (EXIMUK).

As of the beginning of 2019, Oschadbank had UAH 97.9
bln in NPLs (67% of gross loans). The value of NPLs at Ukreximbank was UAH 83.7
bln (59% of gross loans), the nationalized Privatbank (PRBANK) had UAH 224.8
bln (83%) and Ukrgazbank had UAH 8.8 bln (17%). The total amount of NPLs at
four state bank was UAH 435.2 bln at the beginning of 2019, with contributions
from Privatbank, Oschadbank and Ukreximbank being 56%, 23% and 19%,
respectively.

Alexander Paraschiy: The data suggest that Oschadbank made the most progress among the four
state banks in dealing with bad loans. Its share of the total amount of reduced
overdue loans was 61%, while its share in total bad loan restructuring was 77%.
The bank’s balance sheet remains far from being perfect, but its progress
promises it will be able to restructure or get repaid some portion of its bad
loans this year as well (recall that in recent months, it announced another deal to restructure UAH 4.4 bln in debt to
Ukrlandfarming). That allows us to remain bullish on OSCHAD Eurobonds.