Ukreximbank reports 1.2x growth in 3Q and 9M income

Ukreximbank (EXIMUK) reported UAH 27 mln in net income in 3Q12, which contributed to UAH 72 mln in 9M12 profit (both results are up 22% yoy). Net interest income remained broadly flat yoy in 3Q12 at UAH 883 mln, and 5% higher yoy for 9M12 at UAH 2,607 mln, mainly on an increase in interest spread. Profit before loan provisions was up 27% yoy in 3Q12 and up 12% in 9M12 to UAH 2,460 mln, while the bank kept sending most of it to loan loss reserve. The bank’s progress in attracting new deposits in 3Q was impressive: both retail and corporate deposits increased 7% qoq, while gross loans kept declining: -4% qoq and -6% YTD as of end-September.

Alexander Paraschiy: We view the results as broadly neutral for Ukreximbank bondholders, and do not expect any surprises in the near future. The remarkable growth in deposits, amid a high level of trust in state-controlled financial institutions inside the country, is a potential risk for its net interest income. The bank already generated a 9% qoq increase in interest expenses, while, on the upside, this time Ukreximbank was able to adjust loan rates and keep net interest income growing.