Ukrsotsbank continues reporting tiny profit for 3Q13

UniCredit’s Ukrsotsbank (USCB UK) reported a UAH 1.8 mln profit in 3Q13 (+33% yoy), which resulted in UAH 8.2 mln profit for 9M13 (+1% yoy) and implied annualized ROE of 0.1%. The key factors that affected its bottom line negatively in 3Q were decreased net interest income (down 9% yoy, or UAH 57 mln) and a reversal of last year’s positive financial assets revaluation (which subtracted UAH 123 mln yoy from profit), as well as 39% inflation in operating costs (+UAH 140 mln yoy). They were offset by a 39% yoy decline in loan loss provisions, a reversal in provisioning under other obligations (UAH -222 mln yoy total), trippled other operating income (+UAH 86 mln yoy) and 12% yoy higher net commission income (+UAH 20 mln yoy).



In 3Q13, the bank reported an 11% yoy decline in interest income for the third consecutive quarter, while interest costs showed a decline (-9% yoy) for the first time this year (after 19% yoy growth in 1Q and zero growth in 2Q). That allowed the bank to slow down its decline in net interest income to 9% yoy in 3Q (to UAH 553 mln) from 35% yoy in 1Q.



Ukrsotsbank reported a 2% qoq increase in both gross loans (to UAH 17.1 bln) and deposits (to UAH 19.1 bln) in 3Q13. Its regulatory capital (by NBU methodology) remained flat qoq (at UAH 5.05 bln), which led to a slight decline in CAR to 14.7%. The bank’s net loans increased 7% qoq to UAH 17.1 bln, mainly due to a decline in its LLR/gross loans ratio to 30.0% as of end-3Q from 33.8% a quarter before. The bank’s total assets decreased 3% qoq to UAH 37.3 bln.



Alexander Paraschiy: The key area of our worry is an increase in the bank’s operating costs after it demonstrated their decline (-2% yoy) in 1H13. We believe this could be the effect of the bank’s merger with smaller UniCredit Bank (Ukraine), which was approved at the bank’s EGM on August 5. That being said, we see Ukrsotsbank’s standalone results as weak but expected and we are looking forward to seeing the bank’s accounts after it finishes the merger.



With the latest results, we estimate the bank has lost its sixth position among Ukrainian banks as ranked by assets (which it occupied as of end-1H13) to Prominvestbank, and even a merger with UniCredit Bank (if completed) does not guarantee that it will regain the sixth position by the end of this quarter.

Источник: Конкорд Капитал