Residents’ deposits in Ukrainian banks in January this year decreased by 2.1%, or UAH 49.2 billion, to UAH 2 trillion 345.9 billion, a decline in deposits recorded for the first time since August 2022, according to statistics from the National Bank of Ukraine.
According to the statistics, household deposits fell by 2.5%, or UAH 27.4 billion, to UAH 1 trillion 50.9 billion in January. The previous decline was recorded in May and January last year, but then it amounted to less than UAH 1 billion and less than UAH 4 billion, respectively.
The NBU clarified that both hryvnia deposits decreased by 2.6%, or UAH 18.8 billion, to UAH 692.2 billion, and foreign currency deposits decreased by 2.1% in dollar terms, or $0.20 billion, to $9.47 billion.
In the first month of the new year, business deposits decreased by 1.7 percentage points, or UAH 21.8 billion, to UAH 1 trillion 259.5 billion. This was due to a 3.5% or UAH 32.5 billion drop in hryvnia deposits to UAH 884.85 billion. At the same time, foreign currency deposits in dollar terms increased by 3.2%, or $0.31 billion, to $9.89 billion.
The average rate of new hryvnia deposits for households remained unchanged at 11.7% in January, while for the corporate sector, after a pause in December, it dropped by 0.3 percentage points (pp) to 9.9%, returning to the level of November 2022.
As for foreign currency deposits, their yield for individuals remained at around 1.0% per annum for the fourth month in a row, while for legal entities it gained 0.2 pp, returning to the level of August last year – 0.7% per annum.
In January, the six-month-long upward trend in the loan portfolio was also interrupted: it decreased by 0.5%, or UAH 4.76 billion.
According to the regulator, the reason for this was a decrease in the loan portfolio of legal entities by 1.2%, or UAH 8.88 billion, to UAH 748.10 billion. The largest outflow of loans was recorded in foreign currency: the portfolio decreased by 2% in dollar terms, or $0.12 billion, to UAH 6.23 billion, while in national currency, the portfolio decreased by 0.7%, or UAH 3.51 billion, to UAH 512.35 billion.
At the same time, the loan portfolio of individuals grew by 2.1%, or UAH 4.76 billion, to UAH 227.31 billion due to an increase in hryvnia loans by 2.3%, or UAH 4.90 billion, to UAH 215.49 billion, while the foreign currency portfolio again decreased by 0.9% to the equivalent of $312 million.
According to the National Bank, interest rates on hryvnia loans to businesses and individuals increased by 0.6 percentage points to 18.1% and 0.9 percentage points to 34.6% per annum, respectively. At the same time, interest rates on foreign currency loans for legal entities increased by 0.3 percentage points to 6.7%, and for individuals, on the contrary, fell by 1.4 percentage points to 5% per annum.
According to the central bank, interbank and overnight lending rates decreased by 0.4 percentage points in January, to 14.6% and 14.5% per annum, respectively.
As reported, on December 15, the NBU cut the discount rate and the overnight DS rate from 16% to 15% per annum, the three-month DS rate from 20% to 19%, and the refinancing rate from 22% to 21%, and kept the rates at this level by a decision dated January 25.
Ukraine’s annualized inflation rate fell to 4.7% in January this year from 5.1% in December and November.
The net profit of solvent banks in January-November 2023 reached UAH 130.55 billion, while in the same period of 2022 this figure was 6.7 times lower and amounted to only UAH 19.43 billion, according to the National Bank of Ukraine (NBU).
According to the data, in November, net profit decreased to UAH 7.85 billion from UAH 12.85 billion in October, and was lower this year only in January, while banks also finished November last year with the best result of UAH 8.45 billion.
The decline in profits compared to previous months is explained, in particular, by an increase in provisioning last month to UAH 3.75 billion, which is a record high for this year, while in the previous two months, provisions were even dissolved in the amount of up to UAH 1 billion.
According to the NBU, total revenues of financial institutions over 11 months increased by 25.7% year-on-year, with net interest income increasing by 34.5% to UAH 182.22 billion, while net fee and commission income increased by 2.5% to UAH 45.6 billion.
In the first 10 months of the year, the growth rate was higher: total income increased by 27.3%, net interest income increased by 36.5% to UAH 164.24 billion, and net fee and commission income increased by 3.8% to UAH 41.4 billion.
This is due to the fact that in November of this year, compared to November last year, the growth of total bank revenues slowed to 12.3%, or UAH 39.47 billion, including net interest income, which increased by 18.3% to UAH 17.98 billion, while net fee and commission income even decreased by 8.6% to UAH 4.23 billion.
The share of interest income in the total structure of banks in November remained at the level of October – 68.1%, while in November last year it was at the level of 60.2%.
The share of fees and commissions remained unchanged at 21.7% last month, while a year ago it was higher at 23.7%.
The share of proceeds from foreign exchange transactions increased by 0.1 percentage points in November to 7.1%, while in the same period last year it reached 13.1%.
It is noted that banks paid UAH 26.17 billion in income tax for 11 months of this year, including UAH 4.13 billion in November.
As reported, the Rada has increased the corporate income tax on banks from 18% to 50% in 2023 and to 25% in subsequent years.
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.
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.
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.
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.
