27 October 2011
UniCredit Bank Ukraine (UX: USCB UK, N/R) reported 3Q11 financials yesterday, posting UAH 1.1 mln of net profit. Net interest income was flat in q-o-q terms and down 3.5% y-o-y. Net fee income showed solid growth of 23.7% q-o-q and 10.5% y-o-y. Operating expenses grew by 10% y-o-y but declined by 4% in q-o-q terms, bringing C/I ratio to 39.1% vs. 38.2% in 2Q11. Assets shrank 1% q-o-q (-5% YTD), while net loans declined by 2.8% q-o-q, LLP/gross loans ratio grew to 21.5% (up 1.6 pp q-o-q). Svetlana Rekrut: In 3Q11, UniCredit Bank Ukraine continued to show a stable balance-sheet and revenue performance, with slight growth in core revenues (+3% q-o-q), net interest margin remained at 7.2%. Gross loan portfolio was broadly stable (-0.8% q-o-q and -0.2% YTD) and bank’s cost of risk stood at an annualized 5.7% in 9M11. In 3Q11, the bank continued to improve its funding structure, reducing its loan/deposit ratio from 244% at 2010-end to 205%. We think continued provisioning will not allow the bank to return to decent profitability levels in the coming quarters, with weak bottom line expected in 2011 and 2012.