Oschadbank enjoys strong inflow of USD deposits in 3Q15
28 October 2015
Ukraine’s second-biggest lender State Savings Bank (Oschadbank, OSCHAD) reported a 20% qoq increase in its deposit base to UAH 83.9 bln in 3Q15. Its foreign currency deposits showed a spectacular 33% qoq rise (in dollar terms) to the equivalent of USD 1.78 bln as of end-September (+62% YTD). Most of this growth happened amid corporate call deposits (+69% qoq and + 243% YTD, in dollar terms), which might be related to the placement of extra cash in foreign currency by some state companies (e.g. Naftogaz). Oschadbank’s retail foreign currency deposits also demonstrated an increase, although much more moderate at +5% qoq and +1% YTD (in dollar terms). The bank’s hryvnia deposits increased to UAH 45.6 bln, which is +10% qoq and +20% YTD.
The increase in its deposit base (+UAH 28.6 bln YTD in 9M15) resulted in a minor extension of the bank’s loan portfolio. Instead, Oschadbank multiplied its cash balance (+UAH 16.7 bln YTD) and investments in securities (+UAH 12.5 bln YTD).
The bank’s P&L looks much less encouraging as it extended its net loss to UAH 5.4 bln in 9M15 (and UAH 2.6 bln in 3Q15), primarily due to loan loss provisions that amounted to UAH 9.7 bln in 9M15 (and UAH 3.0 bln in 3Q15). The bank’s net interest income improved 25% yoy (to UAH 5.8 bln) and net commission income grew 24% yoy (to UAH 1.1 bln) in 9M15. It also reported a noticeable increase in operating costs of +6% yoy to UAH 1.1 bln in 9M15.
Alexander Paraschiy: Oschadbank’s heavy loss provisioning, most likely, has not resulted in an abnormal decline of its capital adequacy ratio, which, we estimate, remained far above the 10% threshold, unlike for its peer, Ukreximbank. By demonstrating a healthy inflow in deposits (including dollar deposits, which is not the case for other big banks), Oschadbank has retained its status as the safest financial institution in Ukraine. We retain our positive view on OSCHAD Eurobonds, as well as our position that they should be traded at a negative spread to the bonds of its peer Ukreximbank.
