Alfa-Bank (Kyiv) has improved our real GDP growth forecast for 2020 from 3% to 3.2% and expects economic growth to reach 3.8% in 2021, according to the bank’s macroeconomic forecast under the base case (most probable) posted on its website last week. According to the document, the economy would expand with moderate rates of 2.3-2.5% during the first three quarters of 2020. At the same time, the bank sees prospects for economic growth accelerating in the fourth quarter of 2020 to more than 4% due to expected thrust in bank lending, which would provide additional impetus for domestic demand.
“Low baseline effect would be another major reason behind economic growth acceleration at the end of 2020, as the last quarter of the previous year was associated with local slump in industrial and agricultural output,” the bank said in the forecast.
According to the bank’s analysts, low inflation would be one of the key features of 2020. According to the bank’s forecast, average annual growth in Consumer Price Index (CPI) would turn just 3.4% this year, after 7.9% in 2019.
“Only by the end of 2020, inflation would return to the target range set by the National Bank of Ukraine (4-6%), as a result of monetary easing and some recovery in producer prices,” the bank’s analysts said.
The bank’s experts share the recently updated central bank’s expectation of its prime rate at 7% by end 2020 from current 11%. However, they do not exclude that prolonged inflation below target range in 2020 would request for an even more accommodative monetary policy.
The net profit of Alfa-Bank (Kyiv) in January-September 2019 totaled UAH 1.487 billion, which is 69.2% more than a year ago (UAH 879.189 million), according to a quarterly financial statements of the bank.
According to the report posted on Alfa-Bank’s website, net profit in the third quarter of 2019 amounted to UAH 577.513 million, which is 19.2% more than in the third quarter of last year.
Alfa-Bank’s net interest income in January-September 2019 increased 12.2% compared to the corresponding period of 2018, to UAH 2.998 billion. Assets increased 8.4%, to UAH 65.589 billion, including loans issued to customers by 1.3%, to UAH 32.885 billion. Bank liabilities from the beginning of the year grew by 6.4%, to UAH 59.058 billion. Net worth for this period increased 29.6%, to UAH 6.531 billion. The charter capital remained at the level of UAH 12.180 billion.
At the same time, Ukrsotsbank’s net loss in January-September 2019 amounted to UAH 1.092 billion, which is 30.1% more than for the same period of 2018 (UAH 839.465 million), according to a quarterly report on the bank’s website. In the third quarter of 2019, it increased 33.3% compared to the corresponding period of 2018, to UAH 618.586 million.
Ukrsotsbank’s net interest income in January-September 2019 decreased 55.3% compared to the same period in 2018 and amounted to UAH 339.940 million. Assets decreased 31.8%, to UAH 10.690 billion, including loans issued to customers by 37.7%, to UAH 6.116 billion. Liabilities of Ukrsotsbank decreased 30.9%, to UAH 8.708 billion. Net worth decreased 35.5%, to UAH 1.982 billion. The charter capital in January-September 2019 remained at the level of UAH 16.673 billion.
As reported, the National Bank of Ukraine (NBU) in October 2019 revoked the banking license and removed Ukrsotsbank from the public register of banks in connection with the completion of reorganization of Ukrsotsbank through merger with Alfa-Bank.
According to the NBUB, as of July 1, 2019, Alfa-Bank was sixth (UAH 72.159 billion) in terms of total assets, Ukrsotsbank – 13th (UAH 33.129 billion) among 76 operating financial institutions
Alfa-Bank at an auction held on the ProZorro.Sales platform on September 17, 2019 bought the largest pool of assets – mortgage loans of Delta Bank (both based in Kyiv) with the balance-sheet value of over UAH 1.3 billion for UAH 44.14 million, according to information posted on the ProZorro.Sales platform.
Director of the department of consolidated sales of assets at the Deposit Guarantee Fund Taras Yeleiko said on his Facebook page that with a starting price of the lot of UAH 48.4 million, bids initially fell to UAH 33.8 million, but later during the competition between bidders increased to UAH 44 million.
According to him, the pool consisted of 60% of assets located in Kyiv region, 40% of the assets located in Central and Western Ukraine.
Five companies submitted bids for this pool.
“The increase in the number of bidders and their willingness to increase the price offer indicates a revival of the market interest in such assets,” Yeleiko said.
According to him, companies with foreign capital also participated in the auction.
The only one shareholder of Ukrsotsbank on September 10 decided to merge Ukrsotsbank to Alfa-Bank (both based in Kyiv) under the simplified procedure. According to a report in the information disclosure system of the National Commission on Securities and the Stock Market, Alfa-Bank shareholders took a decision to merge Ukrsotsbank under the simplified procedure at their general meeting on September 10.
“Taking into account that Ukrsotsbank JSC and Alfa-Bank JSC are members of the international banking group ABH Holdings S.A., the aim of the reorganization is to optimize the business and create a single reliable and financially stable private commercial bank in Ukraine as a result of the merger,” the report said.
As a result of the conversion of shares in connection with the merger, Alfa-Bank’s authorized capital will be increased by UAH 16.546 billion, up to UAH 28.726 billion.
As reported, ABH Holdings S.A. (ABHH, Cyprus), which indirectly owns 100% of Alfa-Bank (Ukraine), and UniCredit Group (UCG) on October 31, 2016 announced the completion of a deal on the transfer of 99.9% in Ukrsotsbank (Kyiv), UCG’s asset in Ukraine, in exchange for a minority stake of 9.9% in ABHH.
Alfa-Bank’s net profit (Kyiv) in January-June 2019 amounted to UAH 909.674 million, which is 2.3 times more than in the same period of 2018, according to a quarterly report of the bank.
According to the report posted on its website, the net interest income of the bank in the first quarter of this year increased by 16.6% compared with the corresponding period of 2018, to UAH 2.007 billion.
Assets for six months increased by 4.2%, to UAH 62.876 billion, while loans to customers decreased by 1.4%, to UAH 31.999 billion.
Since the beginning of the year, the bank’s liabilities have increased by 2.9%, to UAH 56.922 billion, its net worth rose by 18.1%, to UAH 5.954 billion, charter capital remained at the level of UAH 12.179 billion.
Alfa-Bank was founded in 1993. ABH Holding also includes Alfa-Bank in Ukraine, Belarus, Kazakhstan, Russia and Amsterdam Trade Bank N.V. The subsidiaries of ABHH also operate in Cyprus and the UK.
The consolidated profit of Alfa-Bank and Ukrsotsbank, which are completing their merger, will be around UAH 1.5 billion in 2019, General Manager of the board of the Alfa-Bank banking group, Board Chairman of Ukrsotsbank Ivan Svitek has said in an interview with Interfax-Ukraine, giving his forecast.
“So far, Ukrsots (bank) is still pulling us down on this indicator, but the situation has changed dramatically… By the end of 2019, we plan to reach a total profit of UAH 1.5 billion. Our profit growth dynamics is one of the highest in the market,” he said.
Svitek recalled that in 2018, with Alfa-Bank’s net profit of UAH 1.26 billion, which was the best indicator in the past 10 years, Ukrsotsbank’s net loss amounted to UAH 0.89 billion.
According to the NBU, following the results of four months, the total net profit of the two banks amounted to UAH 406.6 million: UAH 671.3 million from Alfa-Bank minus Ukrsotsbank’s loss of UAH 264.7 million, which is the 10th indicator on the market.
“This is still an echo of the past of Ukrsotsbank. However, we have managed to significantly reduce its losses, which were billions of U.S. dollars before our purchase,” the head of the banking group said, commenting on the results of the four months.
He said that the goal of the merged bank remains the same – to become the largest private bank in the Ukrainian market.
“And we are already in this position in terms of various indicators,” Svitek said.
He said that, speaking of the leading positions, it is about both the number of clients and the volume of assets.
“We are growing dynamically in retail, and in corporate lending we retain our positions,” the head of the banking group said.
According to him, the retention of the corporate loan portfolio is a good result, as the cleaned out NPLs have been replaced by new high-quality loans.
Asked whether Alfa-Bank’s goal is to increase its share in assets from the current 5.5% to 10%, the head of the banking group confirmed that such ambitions exist.
“If we reach 10%, it will be good,” he said, assuming that this could happen in the near future, but giving no other details.
At the same time, Svitek said that the number of branches for the bank is not an end in itself.
He also said that growth can be not only organic, but also through acquisitions.
“We will grow anyway. There are still assets on the market. We are looking at them, analyzing and ready to buy if something very interesting appears. We have a lot of experience and we know how to do it,” the head of the banking group, which in 2014 prior to the acquisition of Ukrsotsbank acquired the Bank of Cyprus, said.
Svitek added that loan portfolios are also interesting to Alfa-Bank, but they are few in the market. According to him, besides that, the financial institution looks at the assets offered by the Deposit Guarantee Fund, but so far has participated in only one tender, where it was a very small package.