Business news from Ukraine

Bank Lviv intends to increase its authorized capital by 35%

Lviv Bank plans to increase its authorized capital by UAH 250 million, or 35.3%, to UAH 958 million 405,338 thousand through additional contributions from existing shareholders.

According to the bank’s announcement in the disclosure system of the National Securities and Stock Market Commission (NSSMC), the relevant issue was submitted to an extraordinary remote shareholders’ meeting on December 18.

It is assumed that an additional issue of shares with the existing par value of UAH 0.1 each will be made as part of the authorized capital increase.

According to the National Bank of Ukraine, as of the beginning of September 2023, Lviv Bank ranked 28th in terms of assets (UAH 9.12 billion) among 64 banks operating in the country. The bank’s net profit for 8 months of this year amounted to UAH 121.1 million.

According to the website of Lviv Bank, its shareholders at the beginning of this year were: ResponsAbility Participations (Switzerland) – 48.557189%, Nordic Environment Finance Corporation (NEFCO) – 13.93623% and Icelandic citizen Margeir Petursson – 37.4692%.

The EBRD pointed out in August this year that Bank Lviv, which is owned by European shareholders, is a regional bank focused on SMEs and one of the fastest growing in western Ukraine, with a loan portfolio that grew from $35 million in 2017 to $133 million in the first quarter of 2023. The bank is headquartered in Lviv and has a network of 19 branches, 13 of which are in Lviv region and six in other cities.

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Ukrainian parliament approves in 1st reading doubling of bank profit tax

The Verkhovna Rada on Friday adopted in the first reading the finalized bill (#9656d) on temporary doubling – up to 36% in 2024-2025. – rate of tax on profits of banks.
According to the first deputy head of the relevant committee, a member of the faction “Golos” Yaroslav Zheleznyak, 247 people’s deputies voted in favor with the required minimum of 226 votes.
He specified that the bill also prohibits for this period the crediting of profits against the losses of previous periods.
“In the budget of 2024, the adoption of this law is laid down as +9.9 billion UAH”, – reminded Zheleznyak.
According to the National Bank, the net profit of 64 operating Ukrainian banks for the first eight months of this year amounted to 95.1 billion UAH, profit tax – 17.0 billion UAH, including PrivatBank – 39.2 billion UAH and 9.0 billion UAH, and four other state banks – 20.6 billion UAH and 0.4 billion UAH.

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NBU expects increase in bank profit tax to 38% to bring UAH 20 bln to budget

The National Bank of Ukraine (NBU) proposes to raise the corporate income tax rate from 18% to 38% in 2023-2024, NBU Governor Andriy Pyshnyi said.

“Our forecast is that additional budget revenues if the current rate is raised to 38% will total more than UAH 20 billion this year and next year,” he wrote on Facebook.

According to him, such a tax design will have a limited impact on macrofinancial stability and at the same time support Ukraine’s defense capabilities.

The NBU governor, citing the monitoring of the financial condition and the results of the assessment of the banks’ stability, believes that financial institutions are quite capable of making additional payments in the current environment. According to the regulator, the tax rate increase will have a limited impact on lending and deposit rates, given the banks’ sufficient margins.

As reported, the National Bank considers additional taxation of banks to be a justified temporary step in view of the war, seeing financial and legal grounds for this, but proposes to increase the tax rate on banks’ profits instead of taxing net interest income as proposed by MPs.

According to Pyshnyi, this is the version the NBU will discuss with the Parliamentary Committee on Finance, Taxation and Customs Policy in the near future.

He also said that the market participants with whom the central bank communicated were sympathetic to this position.

According to the NBU, the net profit of 64 operating Ukrainian banks in the first seven months of this year amounted to UAH 83.2 billion, while the income tax was UAH 14.4 billion, including UAH 34.4 billion and UAH 7.9 billion for PrivatBank, and UAH 18.8 billion and UAH 0.1 billion for four other state-owned banks.

In late August, MPs submitted to the Rada a bill to tax banks’ net interest income at a rate of 5% in 2024-2026 (in addition to corporate income tax), which could bring in about UAH 10 billion to the state budget next year, according to their estimates. In the first half of 2023, banks’ interest income reached UAH 141 billion, including UAH 73.5 billion from transactions with government securities, and net interest income for the same period amounted to UAH 93.6 billion, up 75% compared to the pre-war period of 2021.

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NBU declares another bank insolvent

The National Bank of Ukraine (NBU) has categorized Ukrainian Construction and Investment Bank (Ukrbudinvestbank, Kyiv) as insolvent due to the lack of effective measures to improve its financial situation, the regulator said on its website.

“Since Ukrbudinvestbank was classified as a problem bank on August 4, its financial position has deteriorated significantly, and the management and owners of significant participation have not taken appropriate measures to prevent insolvency,” the NBU said.

He specified that the reason for recognizing the bank as a problem was its failure to comply with the National Bank’s decision to restrict certain types of transactions without reasonable cause.

The regulator noted that the share of the financial institution amounted to 0.04% of the assets of the country’s solvent banks as of September 1, 2023, so its classification as insolvent does not affect the stability of the Ukrainian banking sector.

The NBU reminded that during the martial law, each depositor of Ukrbudinvestbank will receive compensation from the Deposit Guarantee Fund in the full amount of the deposit, including interest accrued as of the end of the day preceding the day of the start of the bank’s withdrawal from the market. As of September 1, 2023, the total possible amount of guaranteed repayments to depositors of this financial institution was UAH 606 million, the press release said.

It is specified that Ukrbudinvestbank is classified as insolvent in accordance with the decision of the NBU Board of September 7, No. 310-rsh/BT.

Ukrbudinvestbank was founded in 2004. According to the NBU, as of July 1, 2023, it ranked 45th among 65 operating Ukrainian banks in terms of total assets (UAH 2.47 billion). Its net profit for the first half of this year amounted to UAH 19.07 million.

According to the financial institution’s website, its largest shareholders are Svetlana Demyanenko (74.93%), Yulia Podgornits and Lyudmila Minevich (9.90% each), and Natalia Shishova (5.27%).

At the end of July this year, Vadym Kachurovsky, who had held the position for almost 11 years, resigned as chairman of the board of Ukrbudinvestbank. His deputy, Natalia Vorobey, was appointed interim CEO until August 2.


Profit of Ukrainian banks for 7 months amounted to UAH 83 bln, which is 24.5 times more than in same period last year

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.


Esayment Financial Company will manage assets of 8 Ukrainian banks

Esayment Financial Company LLC will manage the unsold assets of Ukraina, Allonge, Innovative Industrial Bank, Volodymyrskyy and four other banks, whose liquidation procedure was launched before September 22, 2012.

As reported by the National Bank on Friday evening, the company was determined by the results of the tender held on the electronic platform

According to the NBU, in the first quarter of this year, FC Esayment had no revenue, and net loss amounted to 70 thousand UAH with labor costs of 22.7 thousand UAH. Assets of the company at the end of the quarter were equal to UAH 20.18 mln, shareholders’ equity – UAH 5.89 mln

The European Bank for Development and Savings, Sintez Bank, Soccom Bank and East European Bank were also included in the number of these banks.

It is specified that the relevant decision was approved by the Committee on supervision and regulation of banks, payment infrastructure oversight of the NBU on July 31.

This competition was announced on May 3 this year, potential applicants had 30 working days from the date of publication of the announcement to submit proposals. A similar tender was announced in 2020.

Esayment FC states on its website that it was established 7 years ago and unites 17 professionals. The main owner with 99% stake is the director of the company Sergey Burka. The company has licenses to provide factoring, financial leasing and financial credit services.

The company’s revenue in 2022 amounted to UAH 500 thousand, other operating income – UAH 6.329 million, labor costs – UAH 186 thousand, net profit – UAH 16.2 thousand.