Ukreximbank reports neutral 2011 results
26 January 2012
Ukreximbank (EXIMUK) reported tiny net income of USD 4 mln for 4Q11 and USD 11 mln for 2011, according to results released yesterday. Core earnings remained little changed from a year earlier, with net interest income inching up 4% yoy and net fees and commissions adding 2% yoy. Operating expenses advanced much faster, pushing its C/I ratio down 6 pp yoy to 32%. The bank continued to set virtually all of its operating profit aside into loan loss reserve. The bank’s assets grew a mere 2% yoy in 2011, with total loans remaining broadly flat yoy. Cash and cash equivalents totaled USD 1.1 bln (11.5% of assets) as of end-2011.
Ukreximbank 4Q11 and 2011 financials, UAS, USD mln
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2011 yoy 4Q11 qoq yoy
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Net interest income 435 4% 122 11% 4%
Net fees and commissions 65 2% 18 13% 6%
Operating expenses -128 26% -39 25% 17%
Pre-impairment profit 422 5% 144 73% 29%
Impairment charge for credit losses -404 5% -136 72% 36%
Net income 11 71% 4 29% 74%
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2011 qoq yoy
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Assets 9,400 3% 2%
Gross corporate loans 6,478 -3% 1%
Gross retail loans 125 -2% -13%
Loan loss reserve -1,234 11% 33%
Liabilities 7,181 3% 3%
Corporate deposits 2,273 -5% 21%
Retail deposits 1,693 2% 9%
Equity 2,219 0% 1%
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Source: Company data
Vitaliy Vavryshchuk: After a 28% yoy surge in assets in 2010, it was reasonable for the bank to moderate balance sheet growth while shifting its focus to loan quality. As of end-2011, the share of loan categories 3, 4 and 5 (the lowest grades) stood at 23% (broadly flat yoy). As loan loss reserves totalled 18.6% of gross loans (up 4.5 pp yoy), we believe the bank will continue allocating nearly all of its operating profit to reserves in 2012. We keep the view that despite weak profitability (mainly due to loan losses), the bank remains sufficiently liquid and its ability to serve maturing obligations raises no concerns.
