The assets of pawnshops decreased most significantly in the fourth quarter of last year among all non-bank financial institutions (NBFIs) – by 16.3% to UAH 3.85 billion, while the assets of financial companies decreased by 1% to UAH 250.63 billion, according to data from the National Bank of Ukraine (NBU) released on Friday.
According to a review of the non-banking financial sector released on Friday, the assets of credit unions increased by 0.3% to UAH 1.42 billion in the fourth quarter, insurers by 5.7% to UAH 74.33 billion, and banks by 11.1% to UAH 2 trillion 942.81 billion.
Over the past year, the assets of pawnshops decreased by 6.2%, credit unions – by 1.9%, while financial companies grew by 2.7%, insurers – by 5.7% and banks – by 25%.
As noted by the National Bank, the total assets of non-bank financial services providers decreased by 0.7% in the fourth quarter of 2023, although they increased by 3.2% over the year. Their share in the financial sector assets supervised by the NBU decreased by 1.1 percentage points (pp) to 10.1% during the quarter.
“In the fourth quarter, the number of non-banking financial services providers decreased, as it has been doing throughout the year. 36 financial companies, 16 pawnshops, ten credit unions and insurers, as well as seven lessors were excluded from the Register,” the NBU said.
It is specified that most of the financial institutions left the market by the regulator’s decision, in particular due to non-compliance with license conditions. 14 financial companies voluntarily gave up part of their licenses, and two insurers had their individual licenses renewed after they eliminated violations of the regulator’s requirements.
At the same time, four pawnshops, a financial company, and a lessor were registered in the fourth quarter of 2023, compared to two financial companies and one lessor in the three previous quarters.
In total, more than 320 institutions, mostly financial companies and pawnshops, left the market in 2023, and only nine new NBFIs were registered: four pawnshops, three financial companies, and two lessors.
According to the NBU, 29 credit unions left the market over the year, mostly those that did not attract deposits.
“The volume of new loans decreased by 2% in the (fourth – IF-U) quarter due to a decrease in the volume of all loans, except for business loans. This was reflected in a 3.5% reduction in the loan portfolio compared to the third quarter (2023 – IF-U) and 2% compared to the end of 2022,” the review says.
The declared average share of the principal amount of loans overdue by more than 90 days decreased by 2 percentage points to 26% in October-December 2023.
It is noted that the net interest income of the CS decreased by 11%, primarily due to lower interest rates on all types of loans and an increase in administrative expenses by 23%, which exceeded operating income.
“Despite their operational inefficiencies, the institutions made a moderate profit due to lower loan loss provisions. The small profit has increased the role of own funds in funding credit unions,” the NBU commented.
The volume of share contributions due to the return of funds to depositors and the withdrawal of institutions from the market decreased by 12%, and deposits decreased by only 1%.
It is also indicated that in 2023, the number of violators of standards among the CS decreased by half – to 21. As of the beginning of this year, eight credit unions violated the capital adequacy ratio, while in the previous quarter there were ten, the National Bank reports.
“Most credit unions violate the limit on the share of unproductive assets,” the regulator emphasized.
Financial companies are in the opposite situation: while in the fourth quarter, the segment’s assets decreased by 1%, in annual terms, they grew by 2.7%.
“The volumes of all types of financial services, except for loans, decreased. For the second quarter in a row, financial companies have been increasing lending. In the fourth quarter (2023 – IF-U), the volume of loans increased by 10.7%: the volume of new business loans increased by 10.5%, and the population – by 11.1%.
It is noted that over the past year, 70% more loans were granted to the population than in 2022, but this is still 40% less than in 2021.
Speaking of leasing transactions, their volume decreased by 18% in the fourth quarter of 2023, primarily among legal lessors (financial or operating leases).
“New leasing agreements, as before, were concluded, as before, for the purchase of cars, agricultural machinery and trucks,” the central bank noted.
Last year, financial companies earned UAH 8.5 billion in profit, more than half of which was earned by the operator of the eHouse program, state-owned Ukrfinzhytlo, whose main income comes from interest payments on government bonds in the capital.
According to the data, three-quarters of financial companies were profitable in 2023.
The review says that in the fourth quarter of last year, pawnshops’ activities stagnated: the volume of assets and new loans decreased, and interest income fell. However, the segment made a profit by reducing administrative expenses.
“Profitability indicators declined slightly at the end of 2023. Equity decreased over the year,” the regulator summarized.
Ukrainian and Polish agrarian associations will continue negotiations this week on the transit of grain and other products and the unblocking of the border, said Taras Vysotskyi, First Deputy Minister of Agrarian Policy and Food of Ukraine, during a national telethon.
“It is very important that the associations of different sectors have established communication and will continue to meet this week to clearly agree on the parameters (of export and transit of Ukrainian agricultural products – IF-U). Everyone realized (at the Ukrainian-Polish meeting in Poland last week – IF-U) that interaction and cooperation, agreements will ultimately have the best result,” he said.
According to Vysotsky, in the first two weeks of April, a meeting of the Polish and Ukrainian sides is planned in an expanded format, where farmers of the two countries will look for ways to cooperate. It is expected that this could also become the basis for agreements at the interstate level. Agrarian associations will work on each industry whose representatives were at the talks, including raspberries, juice, honey, eggs, grain, and poultry.
“There is a cautious optimism in this regard, which gives us hope that after a few more meetings to fix the final parameters, we will finally be able to solve this problem,” Vysotsky emphasized.
He also added that the issue of transit of Ukrainian grain is raised at all international meetings.
“Ukraine insists that transit should be available without stops and blockages,” the First Deputy Minister summarized.
agrarian associations, AGRICULTURAL PRODUCTS, BORDER, TRANSIT
In 2023, administrative expenses of Ukrainian non-life insurance companies increased by 11.9% to UAH 5.415 billion compared to 2022, while marketing and advertising expenses increased by 27.4% to UAH 140.7 million.
According to the website of the National Bank of Ukraine (NBU), the cost of concluding and renewing insurance contracts amounted to UAH 9.801 billion, which is 13.7% more than in the same period of the previous year (UAH 8.624 billion), including agency fees of UAH 8.970 billion (+15.1%). Under reinsurance contracts – UAH 129.5 million (+85.5%), in particular, remuneration to brokers – UAH 128.2 million (+91%), of which to non-resident brokers – UAH 26.4 million (+5.6%).
According to the regulator, the cost of settling insurance claims in 2023 increased by 28.9% to UAH 495.8 million, including the cost of paying for appraisers’ services by 40.9% to UAH 174.9 million, and legal costs doubled to UAH 68.3 million.
Assistance services cost insurance companies UAH 201.2 million (+10.8%), and assistance to non-residents – UAH 10.1 million (-15.1%).
The NBU also reports that in 2023, non-life companies in Ukraine collected UAH 41.851 million in gross premiums, which is 20% more than a year earlier, with earned premiums amounting to UAH 34.359 billion (+10.4%). The company paid out UAH 15.601 billion in insurance claims to clients, which is 28.8% more than in 2022.
As reported with reference to the NBU data, as of December 31, 2023, 89 insurance companies specializing in risk insurance were registered in Ukraine, while as of the same date in 202, there were 114.
The Cabinet of Ministers of Ukraine has approved the creation of two new industrial parks (IP) – “Dnister” on the territory of Yampol city territorial community of Mogilev-Podolsky district of Vinnytsia region and “Galicia” on the territory of Kalush in Ivano-Frankivsk region.
According to the Ministry of Economy, total investments in the two industrial parks for the next three years should amount to more than UAH 1.5 billion.
Prime Minister of Ukraine Denis Shmygal at a government meeting on March 29 announced the inclusion of the two new parks in the Register of industrial (industrial) parks, and the creation of the State Office for the development of industrial parks.
According to the Ministry of Economy, the concept of IP “Dnister” assumes the creation of 265 jobs in the processing industry on an area of 17.2 hectares.
“It is assumed that the park will specialize in the production of paper and paper products, processing of plant products and other activities compatible with those listed,” the report explains.
In turn, IP “Galicia” will be located on an area of 19.8 hectares and will provide the creation of up to 1000 jobs.
The main directions of activity are determined by the manufacture of construction materials.
On the territory of the park will be created production of building materials from clay, production of cement, lime and gypsum mixtures, as well as manufacturing of products from concrete, gypsum and cement.
According to the Ministry of Economy, the investors plan to start production of machinery and equipment, introduce processing of industrial and household waste, engage in scientific and technical activities, as well as create enterprises that will work with alternative energy and energy conservation.
As reported, the state budget-2024 for the first time provided for the allocation of 1 billion UAH for the development of infrastructure of industrial parks.
CABINET OF MINISTERS, Galicia, INDUSTRIAL PARK, UKRAINE, Дністер
Italian Intesa Sanpaolo Group, one of the leading banking groups in Europe, has decided to increase the capital of its 100% Ukrainian subsidiary PRAVEX Bank by UAH 1.1 billion at the expense of additional shareholder contributions after the National Bank of Ukraine announced the need to recapitalize the bank earlier this year.
“The capital increase is an additional support to ensure financial stability and increase the capital level of PRAVEX Bank. The strategic decision of the shareholder will have a significant positive impact on PRAVEX Bank’s capital ratios, maintaining liquidity, financial stability and reliability of the institution for all stakeholders,” PRAVEX Bank said on Monday.
The recapitalization will also strengthen the ability to withstand the risks faced by PRAVEX Bank and its customers in the event of a full-scale invasion, the financial institution added.
It is specified that Intesa made this decision on March 28.
The bank recalled that Intesa Sanpaolo Group has always provided full support to its Ukrainian subsidiary, which was demonstrated in various crisis periods in previous years, starting in 2008.
Pravex-Bank was founded in 1992. Its sole shareholder since June 2008 is Intesa Sanpaolo S.p.A. (Italy).
According to the National Bank of Ukraine, as of February 1, 2024, PRAVEX-Bank ranked 27th among 63 banks operating in the country in terms of total assets (UAH 10.96 billion). Its authorized capital amounted to UAH 979.09 million, and its equity capital was UAH 1 billion 14.87 million.
Last year, the bank’s net loss decreased to UAH 92.9 million from UAH 415.2 million a year earlier. Last year, PRAVEX Bank’s assets increased from UAH 10.55 billion to UAH 11.23 billion, while its reserves decreased from UAH 0.34 billion to UAH 0.27 billion.
In early January of this year, the NBU announced the need to recapitalize state-owned Ukreximbank, Pravex Bank and MTB Bank by a total of UAH 10 billion based on the results of an assessment of their sustainability for the next three years under the baseline macroeconomic scenario.
According to the data provided by the NBU, after assessing the quality of assets and the acceptability of collateral for credit transactions, taking into account adjustments, the regulatory capital adequacy (N2) of Ukreximbank was 5.93% as of April 1, 2023, with a minimum of 10%, and core capital (N3) was 2.98% with a minimum of 7%. For MTB, these figures were 7.71% and 6%, respectively, and for PRAVEX Bank – 15.61% and 14.39%.
At the same time, according to the NBU, PRAVEX Bank’s capital would have become negative from the second year under the baseline macro scenario, and in the third year its adequacy ratios would have fallen to minus 16.51%. In the case of MTB, the capital would have gone into a slight negative in the first year, and in the third year, its adequacy ratios would have deteriorated to minus 4.15%.
For Ukreximbank, the ratios would have fallen from minus 3.67% to minus 8.04% over three years.
The holding company Kyivmiskbud has analyzed the projects and decided that, subject to the approval of the Kyiv City Council of the mechanisms and sources of financing, starting from the third quarter of 2024, it is possible to start their gradual unfreezing, said Vasyl Oliynyk, Chairman of the Board and President of Kyivmiskbud, at a meeting of the temporary commission for resolving problematic issues related to the activities of PrJSC Kyivmiskbud.
“During this month and a half (after his appointment – IF-U), we managed to inspect all construction addresses – we have 25 of them, 120 buildings in total – analyze the state of affairs in the company and, together with the team, determine the directions we plan to move in order to stabilize Kyivmiskbud. We have physically measured all the scope of work, which allows us to plan. We are facing challenges, among which the search for funding sources is a priority,” he said.
According to Mr. Oliynyk, the actual stabilization plan for Kyivmiskbud will depend on the amount of funds raised.
He clarified that several options are being considered. In particular, cooperation with the utility company Zhytlo-Invest, which can purchase a certain number of apartments under the Rent to Own program. According to the analysis, the existing volume of apartments in the completed facilities allows to raise about UAH 500 million.
In addition, it is proposed to transfer several completed and commissioned kindergartens to the city. According to Oliynyk, since they were built earlier, these buildings need to be adapted to meet increased safety requirements. If the city agrees to buy out these kindergartens after the refurbishment of the shelters, it will give Kyivmiskbud another UAH 200-300 million to complete the facilities.
At the same time, this amount (UAH 700-800 million) will only be enough to restart several sites. To fully unfreeze the facilities, about UAH 2 billion a year is needed, and in total, as previously announced, about UAH 4 billion in 2024-2025.
“We are negotiating with state-owned banks Ukrgasbank and Sens on lending under state guarantees and collateral. The key may be to increase the authorized capital of Kyivmiskbud, and if Kyiv City Council members support this issue, it would be a real help,” Oliynyk outlined the real mechanisms for resuming the company’s work.
He added that currently, each month of downtime costs the company about UAH 10 million (stabilization of facilities, taxes, etc.).
According to Oliynyk, if the necessary funding is accumulated, the launch of all facilities, starting with five, is possible in the summer of 2024.
As reported, in March 2024, the Kyiv City State Administration set up a temporary commission to resolve problematic issues related to the activities of PrJSC HC Kyivmiskbud.
An audit of the company conducted in 2023 by state-owned Baker Tilly Ukraine Consulting, NHD-AUDIT LLC and Ernst & Young LLC found no signs of actions to bring it to bankruptcy, concealment of financial insolvency or massive transactions by related parties. At the same time, the auditors found that Kyivmiskbud’s operations were disrupted by external factors: COVID-19, a full-scale war, and the Ukrbud factor. On November 17, 2023, the Kyiv City Council Commission approved an interim report with recommendations and proposals for the developer’s further work, including the purchase of apartments in Kyivmiskbud’s facilities, consideration of a financial loan or additional capitalization of the company. The commission also recommended that the Kyiv City Council address the Cabinet of Ministers on the issue of compensating Kyivmiskbud for the total planned loss associated with the completion of Ukrbud’s projects in the amount of UAH 2.28 billion.
HC Kyivmiskbud was established on the basis of the property of the state municipal construction corporation Kyivmiskbud in 1994 by merging controlling stakes in 28 enterprises and other assets in its authorized capital. The holding company consists of 40 joint-stock companies in which the company owns shares, six subsidiaries and 51 companies as associate members.
According to the National Securities and Stock Market Commission (NSSMC), the main shareholder of PrJSC HC Kyivmiskbud is the Kyiv City Council (80%).
