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attached to the new IMF deal -- particularly the increase in gas tariffs -- are expensive concessions by Poroshenko and will hurt him at the polls.
2.0 Politics
2.1 Russia’s state-owned banks in Ukraine all losing money
The Ukrainian subsidiaries of sanctioned Russian state-owned banks are losing money . The banks made a cumulative loss of UAH8.9bn(316mn) in the first three quarters of this year, down 40% compared with the result for the same period last year, according to the banks reports. In 2017 the main loss werefrom V nesheconombank (VEB) Ukrainiandaughter,butthisyearitwas Sberbank that recorded the worst results.
The Ukrainian branches of Sberbank and VTB received the greatest losses among all banks in the country. The Ukrainian Sberbank managed to earn a small profit (0.1bn UAH) in the first three quarters of 2017, but this year it made a loss of UAH7bn.
VTB’s losses increased from UAH1.45bn to UAH1.8bn.
Prominvestbank, the VEB subsidiary, reduced its losses from UAH4.9bn to UAH0.1bn over the same period.
Sberbank, VTB and Prominvestbank were sanctioned by Ukraine in March 2017. The parent structures of these banks immediately put them up for sale. Most investors were interested in the purchase of Sberbank, but the National Bank of Ukraine has not approve any of the potential buyers, who are believed to be linked to Russia.
VTB was the first to abandon its daughter and will close it bank. Similarly, VEB has decided to curtail the activities of Prominvestbank.
Sberbank’s losses are due solely to the formation of additional reserves for the loan portfolio, said Alexander Kalashnikov, director of the financial department of the IBI-Rating rating agency, local press reports.
In January — September 2018, Sberbank’s net operating income amounted to more than UAH2bn, which covers the administrative expenses of the bank 2.3-fold. The press service of Sberbank noted that the bulk of reserves were formed in the second quarter, and in the third quarter, the bank earned UAHUAH0.2bn.
VTB and Prominvestbank formed the bulk of their reserves last year, so the negative financial result of these banks is now less. Despite the fact that Prominvestbank reported only a small loss, unlike Sberbank, it is not able to generate profit, said Alexander Paraschiy, head of analytical department at Concorde Capital. According to him, the interest income reflected by the bank in the amount of UAH1.3bn is “paper gain”, and the bank received on half that amount as “real” money, or UAH0.67bn.
“In terms of cash flow, the bank spends more than it earns, and this difference for nine months amounted to UAH1.66bn UAH(3.85bn rubles),” Paraschiy said.
6 UKRAINE Country Report December 2018 www.intellinews.com