Uzbekistan from December 17 fully resumed customs clearance of goods of Ukrainian origin, including confectionary products, the Ukrkondprom association has reported. According to the association, manufacturers traditionally export the largest amount of confectionary during the New Year and Christmas holidays, so the lack of access to the Uzbek market during this period would cause significant damage to Ukrainian exporters.
As reported, Uzbekistan in the middle of November 2018 suspended customs clearance of goods from Ukraine without official explanation of the reasons. On November 11, the Ukrtsukor association of sugar manufacturers announced a gradual customs clearance of goods of Ukrainian origin.
The Dutch Development Bank FMO will issue $10 million to Nibulon (Mykolaiv), one of the largest Ukrainian grain traders, for the development of river logistics capacities, according to the FMO’s website. “The project will support Nibulon’s strategy, mainly aimed at expanding and optimizing its river grain logistic capacities in order to increase grain trade, reduce the share of road and rail traffic,” the report says.
According to its data, the project will also allow Nibulon to increase export capacity by improving logistics and infrastructure. As reported, Nibulon plans in the next two years to reorient virtually all of its cargoes to Dnipro and transport 4 million tonnes of products per year by water, which will allow reducing the load on the roads.
Nibulon LLC was established in 1991. It is one of the largest operators in the grain market of the country.
The European Investment Bank (EIB) agreed with the Ukrainian Government on a series of new financing operations, in particular, the sides signed an agreement on lending EUR 50 million to finance transport infrastructure improvements throughout the country and a grant of EUR 10 million to finance the implementation of the Ukraine Higher Education Project, the bank has said in a press release. “The projects signed today will result in faster and safer transport infrastructure, better academic facilities and more resources for higher education programmes, all of which will strengthen the country’s competitiveness,” the press service of the bank reported, citing EIB Vice-President Vazil Hudák.
The EUR 50 million EIB loan to improve connectivity in Ukraine and in the Eastern Neighbourhood provides support for transport projects expected to have significant positive local impacts. Road safety, connectivity, and traffic management and control projects are under consideration, with a view to contributing to the economic development of Ukraine.
The project’s first phase will focus on the development of intelligent transport system on national roads, the construction of a missing section of the northern by-pass around the city of Ternopil forming part of the extended TEN-T (Trans-European Transport Networks), and a number of multi-level railway crossings.
Furthermore, the project will support the development of future investment in railway connections between the European Union and Ukraine.
“The project is backed by a EUR 14 million EU grant for the Ternopil bypass investment and a EUR 1.85 million EU grant for project preparation and implementation. Both grants are being provided under the Neighbourhood Investment Platform (NIP),” the bank said.
Ukraine and the EIB also signed the EUR 10 million grant agreement under the multi-donor E5P fund that supports municipal investments in energy-efficiency and environmental projects in the Eastern Partnership countries.
“The grant will help finance the implementation of a Ukraine Higher Education Project, which the EIB is already supporting. Furthermore, the EIB concluded a Memorandum of Understanding with the Ukrainian Ministry of Education and Science for the preparation of a project to create several centres of excellence in the country,” the bank said.
The Ukraine Higher Education Project has already received a EUR 120 million loan from the EIB and EUR 30 million from Nordic Environment Finance Corporation (NEFCO), the EIB said.
The grant will be used to finance, in particular, seven universities in the cities of Chernihiv, Kharkiv, Kyiv, Lviv, Poltava, Sumy and Vinnitsa in order to significantly reduce the energy consumption of their buildings with positive environmental impacts.
The project is also supported by a EUR 3 million EU grant from the Neighbourhood Investment Facility (NIF) to assist implementation arrangements, the bank said.
According to the report, the agreements were signed at the EU-Ukraine Association Council meeting held in Brussels on Monday.
One troy ounce=31.10 grams
Ukrainian banks in 2018 would likely to see a record profit in the past 10 years, First Deputy Governor of the National Bank of Ukraine (NBU) Kateryna Rozhkova said at a press conference in Kyiv. “By the end of 2018, the sector will see profit and, according to our preliminary estimates, this profit could be a record in more than 10 years,” she said, recalling that for the 10 months of this year, banks posted about UAH 15 billion in net profit. According to Rozhkova, the respective result is due to both an increase in operating profit – interest and commission, and a decrease in sending funds to reserves.
“Interest income continues to be the main source of bank profits against the background of a significant decrease in the cost of borrowed funds over the past few years, cleaning up unproductive assets, as well as enhancing lending,” the first deputy governor of the NBU said.
The growth of commission income, she said, is due to the intensification of consumer lending and the development of banking technology.
In turn, Director of the NBU financial stability department Vitaliy Vavryschuk said that banks, which account for more than 40% of the sector’s assets, are currently operating with a return on capital of more than 30%. “This has never happened in the history of the Ukrainian banking sector,” he said. Moreover, the NBU predicts that the profitability of the banking sector will continue to increase next year, primarily due to the completion of work on cleaning up balance sheets and reducing the amounts sent to reserves. Speaking about the risks of the banking system, Rozhkova noted the short term of the resource base. “Due to significant volumes of high-quality and highly liquid assets on the balance sheet of banks, this situation does not cause concern to the regulator, but given the expected increase in lending next year – these discrepancies in terms of assets and liabilities can carry a risk, and therefore will encourage banks to extend the resource base,” she said.
One of the incentives, according to the first deputy governor of the central bank, is the net stable funding ratio (NSFR), which approval is expected to be finalized by the NBU with banking community in the first half of 2019, after which it will be gradually introduced. According to Vavryschuk, the short term of deposits is mainly the result of the crisis that has passed, after which the share of funds in the current account has significantly increased. “Currently, more than 62% of the total funding of banks is liabilities for up to one month. If you look only at the hryvnia segment, this share is about 76%,” he said. Considering the fact that banks over these short liabilities have long-term assets, the NBU notes the systemic importance of equalizing the terms of assets and liabilities.
“Banks should create more incentives [for extending the term of deposits], perhaps through interest rates. Even a minor extension – up to three from one month, will have a significant fundamental effect on the stability of funding of the banking sector,” Vavryschuk said. In addition, Rozhkova noted the continued high level of dollarization of some banks, especially with Ukrainian private capital, among potential risks.
“Our calculations show that with significant shocks, the risks of these banks are increasing, so we continue to strongly recommend banks to reduce the level of dollarization, especially in the active part of the balance,” Rozhkova said.
The first deputy governor of the NBU also said that in 2019, new stress tests of banks would be held. In addition to the standard approach, the National Bank intends to pay special attention to the quality of consumer loans. In addition, the NBU intends to review the regularity of these tests (now they are held annually).
