Ukrexim posts strong deposits growth, ups cash to 21% of assets in 2012
30 January 2013
State-controlled Ukreximbank (EXIMUK) reported a remarkable 17% yoy increase in total assets to UAH 87.9 bln in 2012. The growth was fully backed by a 42% built up deposit base for the year, which reached UAH 44.8 bln. The bank’s lending activity declined in 2012: gross loans fell 6% yoy to UAH 49.8 bln in 2012. The bank, therefore, directed attracted deposits into securities (government bonds), for which holdings increased 24% yoy to UAH 20 bln. The rest was kept in cash, with the balance jumping 2.3x yoy to UAH 19 bln (accounting for 21% of total assets).
The increased deposit base and declined lending activity did not spoil the bank’s net interest income: it improved 1% yoy to UAH 3.5 bln in 2012 as both the revenue and cost components grew 2% yoy. The negative effect, however, was more pronounced in 4Q12: net interest income fell 9% yoy on a 19% yoy increase in costs and just 4% yoy growth in interest income.
Ukrexim’s operating costs grew 20% yoy in 2012 and slightly worsened cost/income ratio to 27% (vs. 24% a year before). Nevertheless, the bank remains one of the most efficient in the sector by this ratio. It continued to build up loan loss provisions (related costs remained broadly flat yoy at UAH 3.1 bln in 2012) and reported a tiny profit for the year at UAH 0.16 bln (up 81% yoy).
The bank remains well-capitalized with its end-2012 at 29.2%.
Alexander Paraschiy: The results clearly indicate the bank remains a safety haven for Ukraine’s residents, and it looks as though for bondholders as well. The key risk now is the bank will become increasingly exposed to related parties (state debt) already this quarter. And its position in state bonds already exceeds equity by 10% as of end-2012.
We are really confused by the bank’s excessive liquidity: its cash position increased by an enormous UAH 10.7 bln (+2.4x) just in one quarter, and recall the bank has just attracted more (USD 0.5 bln in Eurobond) two weeks ago. Most likely, the bank will direct its excess cash into state securities (as its lending activity does not look to be growing) already in 1Q13 to become the largest funding vehicle of state expenses in the first months of 2013.
