Ukrsotsbank breaks even in 4Q11
30 January 2012
Ukrsotsbank (USCB UK) reported net income of USD 1 mln for 4Q11 and USD 2 mln for 2011, according to results released on Friday. Net interest income declined 4% yoy in 4Q11, but was almost compensated by 19% yoy growth in net fees and commissions. Profit before impairment losses fell 15% yoy in 4Q11 due to an upsurge in operating expenses (+14% yoy). The bank continued to allocate almost all of its operating profit to loan loss reserve, taking it to 22% of gross loans. The bank’s corporate loan portfolio increased 4% yoy, but retail facilities fell 6% yoy.
Ukreximbank 4Q11 and 2011 financials, UAS, USD mln
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2011 yoy 4Q11 qoq yoy
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Net interest income 362 -2% 91 1% -4%
Net fees and commissions 69 7% 21 1% 19%
Operating expenses -180 14% -59 49% 24%
Pre-impairment profit 269 -7% 61 -8% -15%
Impairment charge for credit losses -260 -6% -60 -10% -3%
Net income 2 -49% 1 nm 64%
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2011 qoq yoy
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Assets 5,032 1% -4%
Gross corporate loans 2,346 0% 4%
Gross retail loans 2,316 -1% -6%
Loan loss reserve -1,027 2% 24%
Liabilities 4,205 1% -4%
Corporate deposits 879 -12% 29%
Retail deposits 1,337 4% 8%
Equity 827 0% 0%
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Source: Company data
Olena Zuikova: We expect lending by Ukrsotsbank to remain weak in 2012 (in line with the sector), with its loan portfolio and net interest income remaining broadly unchanged vs. 2011. While operating expenses should increase with inflation, we see the lender’s operating profit before provisions declining slightly this year. Ukrsotsbank’s loan quality remains poor: the share of delinquent loans (substandard, doubtful and loss loans) stood at 45% as of end-2011 (flat yoy). With loan loss reserve at just 22% of gross loans, we think the bank remains under-provisioned and will keep allocating nearly all of its operating profit to loan loss reserve at least until 2014, leaving its net income close to zero.
