Oschadbank reports IFRS financials for 2014

Ukraine’s State Savings Bank (Oschadbank, OSCHAD) posted UAH 10.0 bln in losses in 2014, compared to UAH 0.7 bln in profit in 2013, according to its IFRS report released last week. The key factors driving the negative bottom line were an increase in loan loss provisions by UAH 9.7 bln (compared to a UAH 2.4 bln increase in 2013), and losses from exchange differences of UAH 3.2 bln (UAH 0.02 bln in 2013). The bank attributed a major part of the provisions and exchange difference losses (UAH 10.1 bln total) to its loan portfolio in Crimea, having provisioned it fully.

The bank’s losses were compensated by capital increase of UAH 11.6 bln, which enabled Oschadbank to keep its total equity flat yoy at UAH 19.2 bln. As of end-2014, its CAR remained strong at 18.6%, compared to 24.7% in 2013. Its total assets increased 22% yoy to UAH 124.5 bln, mainly due to a 35% yoy increase in its net loan portfolio (to UAH 70.2 bln). The latter was mostly driven by revaluation of foreign currency loans.

Oschadbank improved interest income 22% yoy to UAH 13.7 bln, while its net interest income fell 4% yoy to UAH 5.3 bln in 2014. Its net fees and commission income grew just 2% yoy to UAH 1.26 bln. The bank’s operating costs surged 22% yoy to UAH 4.2 bln, which resulted in a surge of its cost-income ratio to an estimated 59% in 2014 (from 50% in 2013).

The bank slightly decreased its exposure to related parties in 2014, as net loans to (and investments in papers of) the state and state companies decreased to 52.7% of the bank’s end-2014 total assets, from 53.5% a year before. The bank’s exposure to Naftogaz decreased to 13.3% of total assets (from 16.6% in 2013). Gross loans to Naftogaz decreased 1% yoy to UAH 15.1 bln, and value of Naftogaz bonds held decreased 4% yoy to UAH 4.2 bln as of end-2014.

Oschadbank also reported that it agreed to prolong the maturity of all its loans to Naftogaz from March 31 to June 10 this year. In its turn, the National Bank of Ukraine (NBU) agreed to prolong refinancing for Oschadbank (in the amount of UAH 17.6 bln) for the same period.

Alexander Paraschiy: As the report shows, the bank remains an important lending vehicle for the state and its companies, and the state is always ready to increase the bank’s equity once it’s needed. The case of prolongation of the Naftogaz loan and respective central bank refinancing prolongation also clearly indicates that the bank is only acting as an intermediary between the NBU and Naftogaz, effectively earning some commission on loans provided to the gas monopoly. All this, however, does not affect the government’s intension to restructure the bank’s Eurobonds under the broad debt operation program. Tensions between bond holders and the Finance Ministry (or the bank itself) on the conditions of the OSCHAD bond restructuring are on the horizon.

Источник: Конкорд Капитал