Ukrainian banks draw higher foreign currency deposits in 1Q16

Ukrainian banks increased their deposit base in foreign currencies by 3% YTD in 1Q16, in the USD equivalent, to USD 15.2 bln, we learned from bankwide data presented by the central bank on May 19. This is the first positive quarter for foreign currency deposits since 2014, when Russia occupied Crimea. The increase was in both household deposits (+1% YTD) and commercial clients’ deposits (+6% YTD). At the same time, the bank’s local currency deposits declined in 1Q16 by 9% YTD to UAH 397 bln, with outflow in both commercial and retail deposits.

The most significant increase in foreign currency deposits occurred at Oschadbank (OSCHAD) at 28% YTD, in the USD equivalent, mostly caused by increasing commercial accounts (+49% YTD), while retail accounts also rose (+6% YTD). The foreign currency deposits of Ukeximbank (EXIMUK) and PUMB (PUMBUZ) were flat YTD in 1Q16. Privatbank (PRBANK) increased its foreign currency deposits 2% YTD, solely due to a 3% YTD increase in household deposits.

Alexander Paraschiy: Inflow of foreign currency from the households into the banking system is a real sign of stabilization and improved confidence of residents. Among the above-listed banks, the buildup of foreign currency liquidity is most important for PUMB, which will enter soon into a 10-quarter period of gradual repayment of its Eurobond (USD 198 mln outstanding, the frst repayment starts in end-3Q16).