The profit of operating Ukrainian banks in January-July 2023 amounted to UAH 83.2 billion, which is 24.5 times more than in the same period last year (UAH 3.4 billion), Bohdan Danylyshyn, a member of the National Bank of Ukraine Council, said on Facebook on Friday.
This figure is a record high in history: before that, the highest net profit of banks in pre-war 2021 was UAH 39.8 billion, compared to UAH 28.4 billion in 2020 and UAH 36.7 billion in 2019.
In addition, the banks’ profit in July was also a record – UAH 15.5 billion compared to the previous best figures of this year: UAH 14.1 billion in June and UAH 14.7 billion in January.
“Net interest income of banks for 7 months of 2023 amounted to UAH 111.3 billion (+40.7% year-on-year), net fee and commission income – UAH 29.4 billion (+16.3%), and along with the positive result of the revaluation of securities, these were factors in improving the financial results of banks,” Danylyshyn said.
He added that the amount of allocations to provisions for active operations, which in 2022 was the main factor in the deterioration of banks’ financial results (over UAH 120 billion), has remained moderate since the beginning of 2023 at UAH 4.9 billion.
Taking into account the data published by the Council member, in July, net interest income of banks increased to UAH 17.7 billion, net fee and commission income decreased to UAH 3.8 billion, and allocations to provisions increased by only UAH 0.3 billion.
“The return on assets of banks in January-June 2023 amounted to 6.8%, and the return on equity – 67.5%. Positive financial results allow the banking system of Ukraine to demonstrate high capital adequacy ratios, which in July amounted to 24.3% for regulatory capital and 14.8% for the banks’ core capital,” Danylyshyn summarized.
As reported, in 2022, Ukrainian banks reduced their net profit by 3.1 times to UAH 24.716 billion compared to UAH 77.376 billion in 2021.
The International Finance Corporation (IFC), a member of the World Bank Group, plans to resume cooperation with MHP, Ukraine’s largest chicken producer, and provide a loan of up to $30 million to its subsidiary Vinnytsia Poultry Farm LLC to finance the modernization and expansion of the plant’s biomethane production capacity from agricultural waste.
According to the IFC website, the corporation’s board of directors plans to consider this project at a meeting on September 19 this year.
It is noted that the company already operates two biogas plants to process manure from its farms into green energy. As part of its decarbonization strategy, MHP plans to increase biomethane production in Ukraine by modernizing and expanding the capacity of its biogas plants in several stages. The first stage, which will be financed under the project, will serve to demonstrate the viability of liquefied biomethane production.
The total cost of the project is estimated at $52 million, and in addition to the IFC loan, MHP expects to finance it with its own funds. It is also expected that the project will be supported by a $15 million guarantee from the European Fund for Sustainable Development Plus, the UK, and other donors.
It is specified that the construction is planned at a biogas plant in the village of Vasylivka (Haisyn district, Vinnytsia region), which was launched in 2019 and is the largest such plant in Ukraine with a capacity of 12 MW.
At the first stage of the project, it is planned to modernize the existing facilities to produce 14 thousand tons of liquefied biomethane per year, and at the second stage – to expand the capacity to 20.5 MW.
IFC specifies that if approved by the board of directors, this will be the corporation’s sixth investment in MHP since 2003, the last of which was opened in 2014 and closed in 2019.
The corporation also points out that since 2018, members of local communities, with the support of a number of environmental organizations, have complained about the investments of IFC and the European Bank for Reconstruction and Development to the CAO (Compliance Advisor Ombudsman). As noted in the CAO’s materials, despite the efforts of all parties, no final solution was found.
In February 2022, the CAO published its final report and referred the case to the Compliance Department. After the case was suspended in Ukraine in March 2022 due to the full-scale war against Ukraine launched by Russia, the CAO resumed its work on the case on October 17 after consultations with stakeholders.
MHP is the largest chicken producer in Ukraine. It also produces grain, sunflower oil, and processed meat products. MHP supplies chilled chicken half-carcasses to the European market, which are processed, in particular, at its facilities in the Netherlands and Slovakia. In February 2019, the holding completed the acquisition of the Slovenian company Perutnina Ptuj.
The founder, majority shareholder and chairman of the board of MHP is Ukrainian businessman Yuriy Kosyuk.
In the first quarter of 2023, MHP’s revenue increased by 34.7% compared to the first quarter of 2022 to $745.60 million, and net profit amounted to $49.07 million against a net loss of $108.25 million (with a foreign exchange gain of $4.18 million against a foreign exchange loss of $95.32 million).
Trading and production company Agromat LLC has received UAH 52.9 mln of profit (before tax) following the results of January-June 2023 against UAH 10.6 mln of loss for the same period in 2022.
According to IBI Ratings, the company’s net income in the first half of 2023 amounted to UAH 1.3 bln, which is 72% higher than the result of January-June 2022. In addition, Agromat increased retained earnings to UAH 928.3 mln.
In the sales structure for the first half of the year, ceramic tiles accounted for 92% of sales – 2.5 million square meters, while friezes and sanitary ware accounted for 3.5% and 4.2%, respectively.
According to IBI Ratings, the long-term credit rating of Agromat’s series G interest-bearing bonds was affirmed at “uaA” with a “development” outlook.
The decision on placement of bonds of series G in the amount of UAH 100 mln with a public offering was made by the meeting of participants of the company in 2021. Maturity of the bonds is from September 25, 2024 to September 27, 2024. The raised funds are planned to be used to organize the work of new stores and increase inventory.
Argomat Ltd. was registered in 1993. It manufactures and sells ceramic tiles and sanitary ware.
According to Opendatabot, the co-owners of the company with 28.65% shares each are Sergei Voytenko, Oksana Reva and Anatoly Tadai. 10.05% belongs to Olga Bashota and 4% to Nadezhda Rusheliuk.
Agromat has 27 stores and a wide dealer regional network.
The company’s revenue in 2022 decreased by 23.3% to UAH 2.148 bln, while net profit almost doubled to UAH 70.4 mln compared to UAH 132.5 mln in 2021.
The Asset Recovery and Management Agency (hereinafter – ARMA) has opened the Unified State Register of Assets reestr.arma.gov.ua, which are seized in criminal proceedings, with about 36 thousand entries relating to assets transferred to ARMA’s management.
“Understanding of the amount of seized property in our country has been hidden from the public until now and was one of the most closed and highly corrupt areas. ARMA is now reporting on the formation and opening of a register of seized assets, which reflects data on all seized material evidence of economic value,” said ARMA Head Olena Duma at a press conference in Kyiv on Friday.
According to her, the registry is a comprehensive database of all assets in Ukraine that have been seized by law enforcement and courts in criminal cases.
It specifies that it contains information on who is investigating the criminal case, who seized the assets and when, how ARMA manages the property, how much it was valued, how much it was sold for at auction, under what contract it was transferred to the manager, and how much money the management received from the budget.
“That is, the Register makes it possible to track all actions online from its arrest to the state’s receipt of income,” Duma said.
According to the agency, the registry consists of an open part, accessible to every interested person, and a closed part, which is intended for law enforcement. The database contains more than 129 thousand records. In addition to 36,000 records of assets transferred to ARMA’s management, it also contains 829 records of asset valuation activities and 1,144 records of competitive selection of managers.
Another 117 records relate to management agreements and contain data on the amount of income that managers transfer to the budget, and 500 records each relate to assets sold at auction and cash management activities, including the amount of funds placed and interest accrued.
It is specified that the information to be entered into the system from other state registers and databases, primarily the Register of Court Decisions, is organized into different categories, such as movable and immovable property, transport, corporate rights, intellectual property, funds and property complexes.
In particular, the database provides 7,557 entries in the real estate category, 6,253 in the land plot category, 38574 in the transport category, 6,215 in the shares in the authorized capital category, and 8,324 in the monetary assets and banking metals category.
The opening of the Register is in line with the open data policy and the practice of the European Asset Recovery and Management Offices (ARO/AMO), ARMA emphasized.
The agency emphasized that it has made significant efforts to ensure data security, especially in relation to strategic assets and critical infrastructure. In particular, thousands of records have been checked to prevent the disclosure of information about military facilities, and information on the name and description of critical infrastructure assets has been restricted.
“From now on, the public will see the actual results of ARMA’s work over the previous years and will be able to objectively assess how effective these efforts were,” Duma said.
The Parliamentary Committee on Finance, Taxation and Customs Policy is preparing a draft law on additional taxation of net interest income or excess profits of banks, which is likely to come into force in 2024 and bring UAH 10 billion to the budget annually, Committee Chairman Danylo Hetmantsev told Forbes Ukraine.
“It’s not an easy question, we are still evaluating it,” Deputy Governor of the National Bank Serhiy Nikolaychuk commented on the proposal on Facebook.
It is noted that parliamentarians are considering two options for taxation: a tax on all net interest income received for the year at a relatively small or medium rate, or a tax on the difference between net interest income in the reporting year and the average value for the last three to four years.
“For example, in Spain, it is 4.8%,” Mr. Hetmantsev said, referring to the first option.
He clarified that in this country, net commission income of banks is also taxed. “But this is not our story: banks have not yet reached the pre-war level in this regard,” the head of the Financial Committee said.
Commenting on the second option, Mr. Hetmantsev noted that the rate should be high. “For example, in Lithuania, 50% of the difference between net interest income in the base year and its average value over the previous four years is taxed at 60%,” he explained.
According to the committee chairman, the option of taxing all net interest income earned during the year is more optimal.
Mr. Hetmantsev added that he proposes to introduce this tax temporarily: from January 1, 2024, for two years.
He noted that the main motivation for the innovation is the need for additional funding for defense spending.
According to the head of the Finance Committee, the draft law is ready, and after consultations with the Ministry of Finance, the National Bank, specialized associations and the President’s Office, it will be submitted to the Verkhovna Rada.
Mr. Hetmantsev added that there have been no consultations with the market yet. “Although it is not difficult to predict the position of banks,” he said.
As reported, the profit of operating Ukrainian banks in January-June 2023 amounted to UAH 67.65 billion, while the banks ended the same period last year with a net loss of UAH 4.65 billion. This figure is a record high for the first half of the year: the previous highest net profit for the first half of the year was in 2019 – UAH 31.04 billion, compared to UAH 23.79 billion in 2020 and UAH 30.08 billion in pre-war 2021.
According to the NBU, net interest income increased by 40.8% to UAH 93.62 billion in the first half of 2023, commission income by 22.3% to UAH 25.60 billion, and the result from revaluation and purchase and sale transactions increased by 35.8% to UAH 16.30 billion.
Record profits also allowed banks to pay a record corporate income tax in the first half of this year – UAH 12.44 billion, compared to UAH 1.21 billion in the first half of last year and UAH 2.5 billion in pre-war 2021.
In an op-ed in NV on Friday, National Bank Deputy Governor Sergiy Nikolaychuk reiterated the regulator’s position that accusations of overpayment on certificates of deposit are “fundamentally false, manipulative, and dangerous.” He emphasized that the main goal is to achieve price stability and tie up the high liquidity of the banking system caused by the war.
According to him, in the first 7 months of this year, the NBU paid UAH 48.6 billion on certificates of deposit, compared to UAH 40.3 billion last year and UAH 6.3-10.7 billion annually in 2015-2021, but the average daily balance on certificates of deposit increased to UAH 411.4 billion by August this year, from UAH 215.7 billion at the end of 2022 and UAH 145.4 billion at the end of 2021.
Finland will send the 18th military aid package to Ukraine.
“The cost of the military equipment to be supplied will be about 94 million euros,” the government of the republic said on Friday.
The total cost of all the aid provided by Finland will be about 1.3 billion euros.
The exact content of the aid and the delivery schedule are not disclosed for reasons of ensuring safe delivery.
On Wednesday, during a visit to Ukraine, Prime Minister Petteri Orpo promised Ukrainian President Volodymyr Zelenskyy that Finland would soon decide on a new military aid package.
“Artillery, ammunition, and air defense equipment, in particular, are now of central importance in Ukraine. Ukraine needs air defense to protect not only its cities and citizens, but also commercial routes, such as grain shipments in the Black Sea,” he told a meeting of his National Conservative Party’s parliamentary faction on Friday.
He noted that Ukraine will host an exhibition for defense equipment manufacturers in the fall.
“I call on all Finnish defense industry operators to take advantage of this opportunity and participate in export work,” Orpo urged.
