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.
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 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 zakupki.prom.ua.
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.
In May 2023, Ukrainian banks issued 232 mortgage loans totaling UAH 322.5 million, while in April – 41 for UAH 50.1 million, according to the results of a monthly survey by the National Bank of Ukraine (NBU).
According to the regulator, this growth was due to the resumption of preferential lending under the eHouse program.
This also led to a decline in the weighted average effective interest rate on mortgage loans in May to 8.05% per annum from 14.6% in April.
At the same time, loans are mostly issued for purchases on the secondary real estate market: in May, one loan for UAH 0.73 million was issued on the primary market, compared to two loans for UAH 1.78 million in April.
The NBU clarified that out of the 26 banks surveyed, only four financial institutions issued mortgage loans in July, as they did a month earlier.
The survey data show that more than half of all loans in May were issued in Kyiv and Kyiv region – 103 agreements for UAH 164.4 million (51% of the total), followed by Poltava region with a large margin – 11 agreements for UAH 12.6 million (3.9% of the total).
10 loans each were issued in Chernihiv (UAH 10.4 million), Rivne (UAH 13.4 million) and Vinnytsia (UAH 15.4 million) regions.
Solvent banks in Ukraine in January-March 2023 received UAH 34 billion in net profit against UAH 152 million loss in the same period of 2022, the National Bank of Ukraine said on Friday.
“The main factors of the sector’s profitability are the growth of income as a result of the gradual resumption of banking activities and relatively insignificant volumes of additional provisioning,” it pointed out on its website.
Only five banks out of 65 in the first quarter were unprofitable with an aggregate loss of UAH 40 million.
According to the NBU, in March, the net profit of banks rose to 12.58 billion UAH from 6.78 billion UAH in February.
It is pointed out that banks for the quarter increased operating income by 48% year-on-year, including net interest income rose by 41% year-on-year, despite a significant increase in interest expenses as a result of higher interest rates on deposits.
Net fee and commission income for the period, according to the NBU, increased by 20% compared to the result of the first quarter of 2022.
In March compared to February, net interest income increased by 40.4% to 38.16 billion UAH, net commission income – by 14.7%, to 23.7 billion UAH, while interest expenses increased only by 17.4% – to 7.93 billion UAH, and commission expenses even decreased by 15.8% – to 3.02 billion UAH.
“Banking volumes are resuming with the gradual resumption of economic activity, including after the shelling of energy infrastructure in late last year – early this year,” the regulator stated.
It added that the banks’ profitability is also boosted by the positive result of currency buying and selling operations, which was 2.3 times higher year-on-year in the first quarter.
Net operating profit before deductions to reserves doubled in 1Q 2023 year-on-year – to UAH 45.9 billion, while the rate of deductions to reserves against losses from asset transactions fell compared with 1Q of the previous year in 5.6 times, in particular in reserves against loans – 10 times.
During the quarter the deductions increased only by UAH 3.81 billion, including UAH 1.29 billion in March, and in total since the beginning of a full-scale invasion of Ukraine by Russia, banks formed reserves for credit losses of UAH 108 billion.
The National Bank states that the return on equity sector on April 1, 2023 amounted to 58% against -0.25% a year ago.
The profit tax accrued for the quarter – UAH 6.72 billion – exceeded the corresponding annual figure for the historically most profitable year 2021, the regulator said.
In February 2023 Ukrainian banks issued 126 mortgage loans totaling UAH 169.8 million, which is five times less than in February 2022 by number of such loans and by 69% – by volume, according to results of a monthly survey of the National Bank of Ukraine (NBU).
According to it, four banks reported on the issuance of mortgages. Loans were mainly issued under state programs to support lending exclusively in the secondary market of real estate.
The weighted average effective rate on mortgages in February was 8.3%, while in January it was 7.5%.
According to the survey, the most loans were granted in Kiev and the region – 51 contracts totaling 77.5 million UAH (46% of the total amount), in Rivne – 10 contracts for 12.5 million UAH (7%) and in Vinnitsa region – seven contracts for 9.8 million UAH (6%).
