Solvent Ukrainian banks in January-August 2019 received UAH 44.29 billion in net profit, which is 3.2 times more than in the same period in 2018, the National Bank of Ukraine (NBU) has said. “More than half (58.3%) of this result was provided by the activities of state-owned PrivatBank,” the central bank said on its website.
According to the report, the banks’ income for the reporting period increased by 28.5%, to UAH 164.99 billion, expenses by 5.2%, to UAH 120.7 billion.
Based on the previously released data, in August the net profit of Ukrainian banks grew by 1.9 times, to UAH 7.57 billion: income rose by 20.8%, to UAH 23.59 billion, while expenses by 2.5%, to UAH 16.02 billion.
The National Bank explains the growth of the banks’ profitability for the eight months of this year by four factors: the growth of net interest and commission income of the banks by 18%, to UAH 53 billion and by 15%, to UAH 28.4 billion respectively, a positive result from revaluation and purchase and sale operations with UAH 14.9 billion, as well as a low volume of the banks’ payments to reserves with UAH 8 billion against UAH 14.4 billion for the eight months of 2018.
The net profit of solvent banks in Ukraine in January-June 2019 amounted to UAH 31 billion, which is 3.7 times more than in the same period last year (UAH 8.3 billion), the NBU said on its Facebook page.
The NBU pointed to three factors of growth in bank profits: a 20% increase in net interest income of banks, to UAH 39 billion, a growth in net commission income by 17%, to UAH 21 billion, and a positive result from revaluation and from transactions on currency sale and purchase – UAH 10.4 billion.
According to the NBU, there were 76 operating banks in Ukraine as of July 1, 2019.
Capital returns of banks in 2019 would considerably exceed 20%, which is the contingent standard for banking sectors of emerging countries, Director of the Financial Stability Department Vitaliy Vavryschuk said at the presentation of the financial stability report on Tuesday.
“In [the first] five months, the profit is already more than for entire 2018 [in January-May 2019, the net profit of banks was UAH 23.4 billion]. We are confident that capital returns of banks in 2019 would considerably exceed 20%, which is the contingent standard for banking sectors of emerging countries. We do not see any risks to profitability in subsequent quarters,” he said.
According to Vavryschuk, banks should use high profits to form the capital stock. In the coming years, capital requirements will be toughened substantially: it will be necessary to form capital conservation and systemic importance buffers (for systemically important banks), as well as to cover operational and market risks with capital (now only credit risk is covered with capital),” he said.
The net profit of Ukrainian banks, not taking into account insolvent ones, in January-March 2019 totaled UAH 13.167 billion, which is 51.8% more than a year ago, according to a posting on the website of the National Bank of Ukraine (NBU).
Revenue of Ukrainian banks over the period grew by 28.6%, to UAH 58.006 billion.
Expenses of the banking system in January-March 2019 accounted for UAH 44.839 billion, which is 23.1% more than a year ago.
The NBU wrote on its Facebook page that there are three factors for the growth of the banking system’s profit in Q1 2019: growth of net interest income of banks by 18%, to UAH 19.5 billion, growth of net commission income of banks by 18%, to UAH 9.9 billion and foreign exchange revaluation profit of UAH 3.8 billion.
According to the NBU, as of April 1, 2019, a total of 77 banks operated in Ukraine.
All solvent banks have enough assets to meet the requirements to generate the capital conservation buffer of 0.625% until 1 January 2020, reads a posting on the website of the National Bank of Ukraine (NBU). “The same instruments are used for raising both the buffer and common equity. This means that, considering the requirements to raising the buffer, the common equity adequacy ratio (N3) as of the beginning of 2020 should account for at least 7.625%. According to the data as of March 1, 2019 all solvent banks have adequate capital to ensure compliance with the requirements to raising the capital conservation buffer of 0.625%,” reads the statement.
Onwards, the capital buffer will gradually increase each year until it reaches 2.5% as of January 1, 2023.
According to the NBU, such buffer will ensure that banks have raised a capital surplus during a non-crisis period above the minimum required to absorb any possible losses, which may occur in times of overall economic downturn, without breaching the capital adequacy ratio in the future. This instrument will contribute to the targets of the NBU strategy for financial stability by enhancing banks’ loss absorbing capacity.
As reported, introduction of capital buffers was approved by NBU Board Resolution No. 312 on the Approval of Amendments to the Instruction on the Procedure for Regulation of Bank Activities in Ukraine dated May 12, 2015.
Revenue of Ukrainian banks, not taking into account insolvent ones, totaled UAH 20.18 billion in January 2019, which is 38% more than in January 2018, the National Bank of Ukraine (NBU) has reported on its website. The number of banks for the period from February 1, 2018 to February 1, 2018 decreased to 77 from 82 financial institutions.
The National Bank said that the interest income of banks in January increased by 18%, to UAH 13.282 billion, commission fees – by 18%, to UAH 4.628 billion. In addition, banks received UAH 1.656 billion from revaluation and purchase/sale operations (a loss of UAH 1.059 billion was recorded in January 2018), UAH 481 million of other operating income (an increase by 11%), UAH 79 million of other income (a decrease by 39%) and UAH 54 million from return of written-off assets (an increase by 38%).
The expenses of the banking system in January 2019 amounted to UAH 14.754 billion, which is 14% more than in January 2018.
Interest expenses increased by 10%, to UAH 6.255 billion, commission fees – by 35%, to UAH 1.47 billion, administrative expenses – by 15%, to UAH 4.136 billion, and contributions to reserves – by 14%, to UAH 1.759 billion. In addition, other operating expenses increased by 20%, to UAH 821 million, and other expenses decreased by 3%, to UAH 77 million.
After tax deduction, the net profit of Ukrainian banks in January 2019 amounted to UAH 5.426 billion, which is a 3.2-fold rise compared with January 2018.
