FUIB reports strong operating results in 3Q12

First Ukrainian International Bank (PUMBUZ), the financial arm of the SCM business group, reported its 3Q12 financials under local accounting standards yesterday. The bank increased its net interest income 3.6% yoy to UAH 416 mln (+4.6% qoq) in 3Q12 on an increase in both gross loans (+8% YTD) and term deposits (+11% YTD), though interest costs (+32% yoy) grew faster than interest income (+16% yoy). In 9M12, the bank showed a 9.8% yoy increase in net interest income and 11.1% growth in total income, though the growth was mostly of a non-organic nature (an effect of the merger with SCM’s Dongorbank a year ago). Operating costs in 3Q12 remained flat qoq and 1/3 smaller than in 1Q12, suggesting the bank was able to normalize costs post-merger with Dongorbank. Total costs grew 37% yoy in 9M12 to result in 54% Cost/Income ratio for the period (vs. 44% for 9M11). For the third quarter alone, C/I declined to 43% vs. 47% in 2Q12 and 75% in 1Q12. The bank’s provisioning effect on its P&L declined 1.9x yoy to UAH -139 mln in the quarter, which allowed it to report a UAH 67 mln post-provisioning profit (+15% yoy) for 3Q12 (and UAH 195 mln for 9M12, +21% yoy). The bank’s equity increased 2.8% YTD to UAH 4.14 bln.

Alexander Paraschiy: The bank’s results demonstrate it successfully finished its post-merger restructuring in the first quarter, and now FUIB is set to deliver further growth in lending and deposits. Smaller growth in interest income (+9% qoq) vs. costs (+15% qoq) in 3Q12 points to the risk of declining growth in net interest income in the future, though we believe the growth will remain positive in the next 2-3 quarters.