Banking Assets Surge 76% in 2007 yoy

Ukrainian banking asset growth accelerated 75.9% yoy in 2007 to USD 118 bln. The combined net income of banks climbed 54.3% yoy to USD 1.4 bln by yearend. Loan portfolios expanded 80.3% yoy to USD 43.0 bln. Liabilities rose 77.5% yoy to USD 45.6 bln while banking equity was up 64.2% to USD 13.8 bln. Alexander Viktorov: The subprime mortgage crisis infecting most of the world’s financial sector did little to impede the growth of the local banking sector. A continued increase in consumer lending (up 93% yoy), a surge in corporate lending by 65% yoy in 2007 vs. 53% in 2006, combined with strong macro fundamentals (2007E real GDP growth of 7.3%) brought about stronger loan portfolio expansion in 2007 (vs. 73% in 2006). The rising cost of foreign borrowing led banks to return primarily to internal means of financing: total domestic deposits accelerated 52% yoy in 2007 vs. 37% yoy in 2006. With real GDP growth expected to remain above 6% in 2008 and consumer spending firm, we expect asset growth to reach 55-60% yoy and lending to grow 70% in the upcoming year.