PUMB reports 1H15 provisioning losses, stays in NBU indicators

First Ukrainian International Bank (PUMB, PUMBUZ) reported UAH 709 mln in losses in 1H15, according to its report provided on July 24. The key driver for the losses was UAH 2,660 mln in loan loss provisions reported for the period (up 2.8x yoy). The bank’s net interest income fell 1% yoy to UAH 1,235 mln, while its net commission income jumped 3.2x yoy to UAH 1,123 mln to drive its total revenue in 1H15. In 2Q15, however, the bank’s net commission income increased just 14% yoy and plunged 81% qoq.

PUMB’s total deposit base decreased 8% yoy, with both hryvnia-based and foreign currency deposits falling. In particular, its hryvnia deposits fell 2% YTD, or mostly in line with the banking system decline (-1% YTD), and its foreign currency deposits fell 27% in USD terms, as compared to a 23% YTD drop for the banking system.

Despite the large loan loss provisioning and deposit outflow, the bank met all the criteria set by the central bank. In particular, its end-1H15 CAR amounted to 13.1% (up 0.4pp qoq, but down 1.1pp YTD), which is safely above the 10.0% threshold and above the industry average of 9.0%. Its current liquidity ratio was 50% as of end-1H15, which was above the minimum level of 40%, but below the industry average of 70%.

Alexander Paraschiy: The bank’s deposit outflow, at rates higher than the market, and decreasing liquidity are clearly worrying signals, while a significant increase in the company’s commission income in 1Q15 and 1H15 does not look sustainable. That said, we believe the bank’s management and key shareholder will continue to do its best to meet all the central bank’s criteria for solvent banks. At this stage, we do not see a large risk that PUMB will have to reschedule the already smooth repayment schedule of its Eurobonds. Recall, the bank is due to repay USD 10 mln in December 2015 as part of its Eurobond amortization.