Page 14 - BNE_magazine_06_2019

14 I Companies & Markets bne June 2019
Ukraine’s banks are back in profit, provisions made bad debt non-toxic
Ben Aris in Berlin
Most of Ukraine’s leading banks are back in profit as of the end of the first quarter of this year, the National Bank of Ukraine (NBU) reports.
The NBU said that 69 out of 77 solvent banks posted profit in January-March 2019, while eight financial institutions completed the first quarter with a loss, as cited by UNIAN.
The most profitable included PrivatBank (UAH7.6bn, or $288.5mn), Raiffeisen Bank Aval (UAH1.1bn, or $41.8mn), OTP Bank (UAH793mn, or $30.1mn), PJSC First Ukrainian International Bank/FUIB (UAH757mn, or $28.7mn), and Prominvestbank (UAH633mn, or $24mn).
The loss-leaders were the Ukrainian branch of the Russian giant Sberbank (UAH1bn/$38mn), Bank Credit Dnipro (UAH488mn/$18.5mn), Ukrsotsbank (UAH168mn/$6.4mn), Pravex Bank (UAH25mn/$949,127), and Misto Bank (UAH9mn/$341,686), the NBU said, as cited by UNIAN.
Ukraine's operating banks posted a sector aggregate
of UAH12.9bn, or $489.7mn, in net profit in January-March 2019, which was 1.5 times up year-over-year.
PrivatBank was nationalised by the state in December 2016, but since its bailout it has become one of the most profitable banks in the country. Net profit of PrivatBank,
Ukraine banks profit (monthly)
the largest lender by assets, jumped by 3.4 times year-on-year to UAH5.2bn ($190) in January and February, the bank said on March 21.
The other big issue for Ukraine’s banking sector is what to do about the bad debt. As bne IntelliNews recently reported, NPLs in the system were a worrying 51.7% as of April. NPLs have fallen somewhat in the last two years, but the absolute change in the overall level has been marginal.
However, according to experts what has changed is the profits banks have been earning have allowed them to
“The banks can start paying the profits into their capital, which allows them to retire bad debt, increase lending and earn their way out of the hole the sector fell into in recent years”
provision for the bad debt, which improves the stability of the sector. Going forward the banks can start paying the
Ukraine banks profit (cumulative)
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