Page 40 - UKRRptOct19

8.0​ Financial & capital markets 8.1​ Bank sector overview
Ukrainian banks increased their net profit by 3.2 times year-on-year ​to UAH44.29bn in January-August, according to the National Bank of Ukraine (NBU)'s report.
More than half (58.3%) of this result was provided by the activities of the nation's largest lender, state-owned PrivatBank, nationalised in late 2016.
The banking sector's income for the reporting period increased by 28.5% y/y, to UAH164.99bn, expenses by 5.2% y/y, to UAH120.7bn.
Monthly profit in August (latest data) was UAH7.6bn, almost double the profits in August in both the preceding year.
However, the return to profitability is even more dramatic in terms of cumulative profits of the sector, which reached UAH44.3bn in the first eight months of this year, well over three times more than in the same period of 2018 and more than ten times the profit banks earned in the first eight months of 2017.
The other parameters of a bank’s health have also improved. The capital adequacy ratio (CAR) has improved from 15.3% in August 2017 to a very comfortable 18% this August.
NPLs remains the biggest problem for the sector but as all the bad debt has been provisioned for these bad credits don't pose a danger to the sector. They are only a weight on banks’ balance sheet as they have to carry the provisions, which locks up capital that could otherwise be put to use.
Privatbank remains the biggest problem with 80% NPLs, which are what the bank calls “fraud loans,” of money that was stolen by its former owners.
NPLs are falling slowly and the National Bank of Ukraine (NBU) is pressuring banker to get the bad debt off their balance sheets, but the managers and owners are unwilling to force the issue as they would have to book losses and instead hold out the hope that a buyer can be found eventually.
However, one significant step was taken forward when the NPLs of the insolvent banks were all written off in June substantially reducing the level of NPLs for the sector overall.
All in all the level of NPLs have dropped by a bit more than 5% in the last two years but remained at 49% in August, falling below the 50% market for the first time in years.
40​ UKRAINE Country Report​ October 2019 ​ ​www.intellinews.com