Oschadbank reports stronger balance sheet, weak P&L in 1H15

Ukraine's State Savings Bank (Oschadbank, OSCHAD) reported its 1H15 financial report under local accounting standards last week. Its total assets increased 16% YTD to UAH 148.1 bln, mostly due to doubled cash (to UAH 26.4 bln) and a 17% YTD increase in its securities portfolio (to UAH 46.5 bln) as of end-1H15. Its net loan portfolio increased just 2% YTD to UAH 70.4 mln. Its deposit portfolio showed robust 26% YTD growth to UAH 69.5 bln, mostly due to an increase in foreign currency deposits (+22% in USD equivalent, to USD 1.33 bln). Its local currency deposits grew 9% YTD to UAH 41.5 bln.

Spectacular growth of its 1H15 deposit base, coupled with lagging loan portfolio growth, did not stop the bank’s net interest income from improving 24% yoy to UAH 3.76 bln. However, the bank actively provisioned its loan portfolio, as expected. Its loan provisioning costs reached UAH 6.75 bln, which resulted in a negative bottom line of UAH 2.81 bln for 1H15. Although the bank’s regulatory capital plunged 40% YTD to UAH 18.2 bln, its CAR stood at a comfortable level of 16.0% as of end-1H15.

Alexander Paraschiy: The bank has the image of the safest savings institution in Ukraine, so its improved deposit base comes as no surprise. Its active provisioning during 1H15, which resulted in CAR falling below the government’s earlier standard of 20%, might imply the bank will be seeking to ask for recapitalization from the state. At the same time, we are not aware of any government plans to contribute to the bank’s equity this year.

What could spoil the bank’s balance sheet is its possible failure to restructure its Eurobonds. Oschadbank has a bondholder meeting scheduled for Aug. 3 to approve the restructuring. Given the successful debt operation performed by its peer Ukreximbank, we do not expect any negative surprises at the meeting.

Источник: Конкорд Капитал