Privatbank profit falls, CAR improves in 2Q15

Ukraine’s leading lender Privatbank (PRBANK) reported its financials for 2Q15 and 1H15 on July 20. Its bottom line plunged 84% yoy to UAH 61.3 mln in 1H15, mainly due to a radical 58% yoy drop in net interest income to UAH 2,248 mln. This was a result of a 56% yoy increase in interest costs on the back of minor growth of 12% in interest income. Its OpEx increased 2% yoy to UAH 3,890 mln. At the same time, the bank’s loan loss provisioning fell 28% yoy to UAH 828 mln. The ratio of provisions-to-gross loans decreased to 11% as of end-1H15 from 13% at the beginning of the year.

Privatbank’s net loan balance increased 11% YTD to UAH 180 bln as of end-1H15, mostly due to appreciation of foreign currency loans, which rose just 2% YTD in USD terms. Hryvnia loans were flat YTD at UAH 111 bln. The bank’s deposit base increased 13% YTD to UAH 160 bln as of end-June, again mostly fueled by appreciation of foreign currency deposits. In USD terms, foreign currency deposits decreased 13% YTD. At the same time, hryvnia deposits increased 9% YTD to UAH 71 bln. The bank significantly increased borrowing from other banks (+51% YTD to UAH 34 bln, as of end-1H15), which we attribute to more lending by the central bank. The bank’s accounts with other banks (all in foreign currency) doubled YTD, in dollar terms, to USD 164 mln. The bank’s total assets increased 17% YTD to UAH 240 bln as of end-1H15, while its local currency assets increased only 10% YTD to UAH 135 bln.

Privatbank’s regulatory capital increased 1.8% qoq and 3.1% YTD to UAH 22.7 bln and its CAR (under local standards) improved to 9.97% as of end-1H15, nearly approaching the 10% threshold (up from 9.05% a quarter before). At the same time, Privatbank’s current liquidity ratio (for a 30-day period) worsened to 63% as of end-1H15 (from 84% at the year’s start and 74% as of 1Q15).

Alexander Paraschiy: The provided data suggests that the bank lacks capital to report enough loan loss provisions (and net losses). It’s also facing some problems with liquidity and it had to increase its dependence on central bank loans. This confirms our view that the bank will be limited in its ability to improve the restructuring terms of its 2016 subordinated Eurobond worth USD 150 mln, even after its holders declined Privatbank’s first offer.

We expect the bank will be able to slightly improve its deposit base and liquidity in the coming quarters, provided the local currency remains stable.

Источник: Конкорд Капитал