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Assets of Ukrainian banking sector contract by 4.6% m/m in January.

February 27, 2014

In January, the assets Ukrainian  banking sector contracted by 4.6% m/m to UAH 1.22tn (USD 128bn), the National Bank of Ukraine (NBU) has announced. At this, total assets (not adjusted for reserves on active operations) decreased by 4.1% to UAH 1.35tn, cash and precious metals - by 3.3% to UAH 35.2bn. Correspondent accounts with other banks increased in January by 3.7% m/m to UAH 81bn. The share of foreign capital in the Ukrainian banking system in January remained at 34%, the NBU said.

The proportion of problem loans granted by Ukrainian banks increased from 7.7% to 7.8% in January, the NBU said. The total amount of loans granted was UAH 913.1bn as of February 1 (UAH 911.4bn as of January 1).

On Feb 25, the NBU has pointed out to deceleration of the drain of deposits from banks, NBU Governor Stepan Kubiv has told. Kubiv underlines, today he sees no risks for citizens to keep money on deposits. The NBU Governor says that the instruments commercial and state banks applied to the issues of drain of deposits gave positive results. The Ukrainian Credit-Banking Union (UKBS) association also called citizens not to give in to panic due to increased political turmoil, withhold engrossment on foreign currency and early termination of deposit agreements.

The regulatory capital of banks totaled UAH 205.8bn as of February 1, and their net profit totaled UAH 0.81bn in January. Banks' incomes were UAH 15.331bn and expenses - UAH 14.521bn. As of Feb 1, 2014, the profitability of the financial institutions' assets made up 0.78%, and return on equity - 5.01%.

The regulatory capital of banks totaled UAH 205b as of January 1, and their net profit totaled UAH 1.4bn in 2013. As of Feb 1, 2014, of 181 banks licensed in Ukraine, 49 financial institutions were banks with foreign capital (as at January 1, 2014, there were 49 of 180), including 19 banks with 100% foreign capital (as at January 1, 2014, there were also 19 banks).

The Ukrainian Credit-Banking Union has called on the National Bank of Ukraine (NBU) to urgently facilitate a procedure for receiving refinancing credits by banks and make it transparent to retain stability on the monetary and credit market and not to allow destabilization of the Ukrainian banking system, as well as to support current liquidity and ensure payments by banks. Bankers also propose permitting the obtaining of overnight credits using the application principle within the limits set by the NBU.

In addition, the union's experts said that the double refinancing system should be canceled. The system foresees depositing of a part of funds of banks on separate accounts and correspondent accounts of banks at the NBU. The union proposed to retain the sum of obligatory reserves only on banks' correspondent accounts at the NBU as of early operating day. The union also proposed the publication of NBU's decisions on the provision of refinancing to banks.

The union supports the introduction of tough control over the use of refinancing funds. The association initiated the introduction of daily detailed analysis of 50 largest applications for purchase of foreign currency under foreign economic contracts in the country to prevent the withdrawal of funds abroad.

The union also recommended the NBU to cancel the procedure for purchase of foreign currency with the presentation of ID documents by the public, as the NBU's steps in relaxing the purchase of foreign currency by banks from the public will promote the improvement of the state of Ukraine's balance of Payment and replenishing its forex reserves.

Among other urgent anti-crisis measures is the imposing of a moratorium on the application of any punishment measures or fines to banks for violation of requirements and obligatory reservation, publication of daily surveys on the state and the pace of functioning of the banking system by the NBU and the obligatory attraction of representatives of bank associations to the participation in meetings on the consideration of crisis issues.

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Source: IntelliNews - Weekly Reports

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