Ukreximbank cuts net loss by 76% in 1H16

Ukraine’s State Export-Import Bank (Ukreximbank, EXIMUK) reported a 69% yoy increase in net interest income to UAH 1.64 bln in 1H16, according to its July 26 filing. The increase was the result of a 11% yoy increase in interest income to UAH 7.22 bln and almost flat yoy interest costs. The improvement, however, did not enable the bank to post a positive bottom line as it still had to report high loan loss provisions (UAH 2.42 bln, -53% yoy) and losses from revaluation of foreign currency (UAH 0.94 bln, -79% yoy). Its negative bottom line amounted to UAH 1.33 bln in 1H16, which is a 76% yoy decline.

The bank’s total assets increased UAH 11.4 bln (+8% YTD) to UAH 152.7 bln, solely due to an increase of its securities portfolio. This was the result of the government’s contribution of state bonds into the bank’s equity: Ukreximbank’s share capital increased 43% YTD to UAH 31.0 bln. This allowed the bank to report positive regulatory capital as of end-June 2016 (at UAH 6.9 bln, CAR of 8.9%), an increase from negative capital of UAH 3.8 bln at the year’s start.

All the other balance sheet items changed little in 1H16, including a 1% YTD gain in its loan portfolio to UAH 55.7 bln and 3% YTD growth in deposit base to UAH 81.8 bln. On a quarterly basis, the bank’s loan portfolio fell 2% qoq and its deposit base was unchanged in 2Q16.

Alexander Paraschiy: The relatively poor performance of Ukreximbank’s loans and deposits in 2Q16 is solely explained by the strengthening of Ukraine’s local currency vs. the U.S. dollar, the currency that dominates the bank’s balance sheet. Otherwise, the bank’s results brought neither positive nor negative surprises.