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.
Ukrainian banks expect that lending and inflow of deposits continue in 2019, they also count on improvement of the loan portfolio, according to the poll on the conditions of banking lending conducted by the National Bank of Ukraine (NBU). According to a report posted on the central bank’s website, three quarters of the banks surveyed predict growth in corporate loans in 2019, 62% of respondents – the growth of consumer loans.
Some 66% of respondents predict the continuation of the inflow of deposits from the public in 2019, 67% – the inflow of business funds.
“The value of deposits is the highest in the entire history of observations,” the NBU said.
In the fourth quarter of 2018, the demand for loans continued to increase both from the public and business, due to the growing needs of enterprises in funds for capital investment and replenishment of working capital, as well as debt restructuring. At the same time, the business was mainly interested in short-term hryvnia loans.
In the fourth quarter of 2018, banks somewhat increased the standards for approving applications for all types of business loans along with deteriorating expectations, primarily for the exchange rate and economic development, as well as increased collateral risk. However, in the first quarter of 2019, banks plan to slightly relax domestic business lending requirements, especially for loans to small and medium-sized enterprises.
Consumer lending contributed to growth in the retail loan portfolio in the fourth quarter of 2018. The demand for respective loans was linked to an improvement in consumer confidence and a rise in spending on durable goods.
Standards for loans issued to households have not changed.
According to the report, banks, for the first time in five quarters, noted a decrease in liquidity risk.
“Banks expect that credit, currency and operational risks will increase in the first quarter of 2019, liquidity risks will decrease, interest rates will not change,” the NBU said.
The survey was conducted from December 18, 2018 to January 10, 2019 among the loan managers of 61 banks, which share of the total assets of the banking system is 96%. The next survey on bank lending will be about expectations for the second quarter of 2019 and will be published in April.
Profit of Ukrainian banks in January-November 2018 totaled UAH 20 billion, and this is an 11-fold rise year-over-year, First Deputy Governor of the National Bank of Ukraine (NBU) Kateryna Rozhkova has said.
“The sector this year will make profit, which can be a record for more than 10 years. And most importantly it is real profit!” she wrote on her Facebook page on Thursday.
According to her, the year is not over yet, so various adjustments are possible, including the expenses on creating reserves, but the growth of interest income by almost 20% and commission income by 25% indicates that the banking sector is gradually but surely recovering.
Rozhkova predicted that in 2019, the sector income will remain high, although high interest rates will put pressure on income of banks.
Revenue of Ukrainian banks, not taking into account insolvent banks, in January-July 2018 totaled UAH 108.913 billion, which is 7.17% more than a year ago, according to a posting on the website of the National Bank of Ukraine (NBU).
The number of banks for the period from August 1, 2017 to August 1, 2018, was reduced to 82 from 89. At the same time, the assets of banks during this period increased by 4.05%, to UAH 1.315 trillion, and total assets (not adjusted to reserves for covering possible losses from active operations) grew by 7.77%, to UAH 1.876 trillion.
The National Bank said the interest income of banks over the period increased by 9.37%, to UAH 78.045 billion, while the loan portfolio from August 1, 2017 to August 1, 2018 increased by 10.92%, to UAH 1.078 trillion.
Commission income rose by 3307%, to UAH 28.303 billion, other operating revenues also increased by 56.72%, to UAH 4.661 billion, other income by 21.06%, to UAH 799 million.
Expenses of the banking system over the period amounted to UAH 99.144 billion, which is 2.65% less than for the same period in 2017.
Interest expenses decreased by 8.19%, to UAH 39.154 billion, while the total amount of deposited funds, including term deposits from other banks, grew by 8.18%, to UAH 953.163 billion.
Net profit after taxes of Ukrainian banks in January-July 2018 totaled UAH 9.769 billion, while a year ago the loss of UAH 223 million was recorded.
