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banks, the government bonds invested are only 12%.”
And the banking business is becoming more diversified. In December banks earned a total of UAH244.4bn over the course of the year, up from UAH204.5bn a year earlier. However, 63.1% of this was earned from the traditional business of charging interest on loans, down from 68.8% a year earlier. That means a third of banks income is earned from other sources, with commission fees being the most important. (Banks earned UAH63.1bn from commissions in 2019.)
The share of non-interest income has been falling steadily over the last years as banking begin to performing their traditional function of financial mediation again. In January 2016 interest income accounted for 92.5% of banking income, but had fallen to 71.2% by the end of that year and has been falling slowly ever since.
The rescue and restructuring of Privatbank has also gone well, which was nationalised by the state in December 2016 when it was found to have a $7.2bn hole in its balance sheet after its former owner oligarch Ihor Kolomoisky stripped the bank of its assets using a scam consisting of making loans to shell companies he controlled.
Privatbank is now state-owned and under new management who made it the most profitable bank in the country in 2019, earning a hansom $1.3bn in profits. A distant second most profitable bank was Austrian-owned Raiffeisen Bank Aval that earned $195mn.
The runners up included First Ukrainian International Bank (FUIB) with $107mn; Ukrsibbank with $106mn; and Hungarian-owned bank OTP Bank with $104mn. Of Ukraine’s 75 operating banks, 69 were profitable in 2019, according to the National Bank of Ukraine (NBU).
The cumulative profits for the year are easy to see from the chart after a lacklustre year in 2018 and difficult year in 2017.
However, the improvement is more dramatic when drilling into the month-on-month numbers. Ukrainian banks earned an average of UAH4.9bn a month in 2019 – almost triple the UAH1.9bn they earned in 2018, whereas banks lost an average of UAH2.2bn a month in 2017, although the bulk of that was concentrated in one month alone: in December 2017 Ukraine’s banks lost
36 UKRAINE Country Report March 2020 www.intellinews.com
