Oschadbank reports flat yoy profit in 3Q13

State lender Oschadbank (OSCHAD) reported a 2% yoy increase in net profit to UAH 187 mln in 3Q13, according to UAS accounts made public on October 16. The bank increased loan loss reserves by UAH 368 mln yoy in the quarter (to UAH 1046 mln), but the negative effect of higher provisioning was offset by UAH 125 mln yoy growth in net interest income (to UAH 1402 mln) and by a revaluation gain on securities that amounted to UAH 284 mln in 3Q13 (vs. zero a year before).

In 9M13, Oschadbank increased profit 17% yoy to UAH 481 mln, as growth in net interest income (+12% yoy to UAH 4094 mln) outweighed 30% yoy higher loan loss provisioning (which amounted to UAH 2,210 mln for the period).

The bank’s gross loan portfolio increased 2.9% qoq to UAH 52.1 bln, with 3/4 of the increase explained by growth in corporate lending. Year-to-date, the increase in the bank’s gross loan portfolio was 1.9%, and growth in its retail portfolio was 18.7% in 9M13. Like its peer Ukreximbank, Oschadbank was able to decrease its securities portfolio in the quarter: it declined 4.0% qoq to UAH 23.7 bln. As of end-1H13, 77% of the securities portfolio were bonds of the Ukrainian government, state and municipal institutions.

While the bank’s deposit base increased 2.5% qoq in 3Q13 (to UAH 44.1 bln), its total liabilities declined 4.9% qoq (or by UAH 3.8 bln), mostly caused by a UAH 4.1 bln qoq fall in “other financial liabilities.” Oschadbank’s CAR decreased to 28.8% as of end-3Q, from 29.4% a quarter before, still remaining safely above the 10% threshold.

Alexander Paraschiy: The bank’s results provide no surprises for us, while a decrease in its exposure to bonds may look slightly positive. A sign of worry is the slowing growth of net interest income (+10% qoq in 3Q13 vs. +13% yoy in 1H), but we do not expect this will much affect the bank’s liquidity and solvency in the near term.