the ukrainian banking system
DESCRIPTION
15th BACEE Country and Bank Conference 14-16 November 2006, Budapest. THE UKRAINIAN BANKING SYSTEM. 15th BACEE Country and Bank Conference 14-16 November 2006, Budapest. Ukraine: number of registered and functioning banks. Number of functioning banks still growing - PowerPoint PPT PresentationTRANSCRIPT
THE UKRAINIAN
BANKING SYSTEM
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Ukraine: number of registered and functioning banks
Number of functioning banks still growing
In 2005, 6 new banks registered, in 9 months of 2006 – another 9 (Sygmabank, ”Prestige”, Delta Bank, AIC-Bank, Partner Bank, Bohuslav Bank, ”Concord”, Ipobank, Finansbank)
190188186
183182181179179
182185
166165165162160
157158152
153151
150
155
160
165
170
175
180
185
190
195
06.2
002
01.2
003
06.2
003
01.2
004
06.2
004
01.2
005
06.2
005
01.2
006
06.2
006
10.2
006
Registered banks
Functioning banks
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Banks with foreign participation
32
28
23
19181920
20
11119
76676
0
5
10
15
20
25
30
35
With f oreignparticipation
100% f oreignownership
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Share of foreign investors in UA banks’ statutory capital (%)
13,711,3
9,6
19,5
23,425,4
0
5
10
15
20
25
30
01.2003 01.2004 01.2005 01.2006 06.2006 10.2006
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Major acquisition of stakes in Ukrainian banks by foreign investors in 2005-2006
Bank's name Rank in UA as of 01.07.06
Investor's name
Aval 2 Raiffeisen International
Ukrsibbank 3 BNP Paribas
Ukrsotsbank 5 Banca Intesa
Raiffeisenbank UA 7 OTP
VABank 19 TBIH Group NL (minority)
Index-Bank 22 Credit Agricole
Mria Bank 26 VTB
Megabank 42 BA-CA
NRB-Ukraine 43 Sberbank
Agio (SEB Bank) 55 SEB
Agrobank 56 Home Credit (PPF)
Bank Universalnyi 74 EFG Eurobank
Prestige Bank 58 Erste
Avtoinveststroybank Russian Standard
Leader-Bank Renaissance Capital
UA banks abroad: Ukrprombank buys 35% of Arminvestbank, Pivdennyi Bank buys Regional Investment Bank (Latvia)
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Ukrainian banks: Total Assets (gross), bn UAH
299,4
250223
141,5120,4
105,684,4
57,8
0
50
100
150
200
250
300
350
01.2003 06.2003 01.2004 06.2004 01.2005 01.2006 06.2006 10.2006
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Dynamic growth
Top Ukrainian banks by Assets as of 1 January 2005
Most of large banks grow quicker than industry average
0
5
10
15
20
25
30
Privat
Aval
Prom
inve
st
Ukrsi
b
Ukrex
im
Ukrso
ts
Oschad
Raiffe
isen
UA (O
TP)
Nadra
Finan
si i K
redit
Brokb
usines
s
Assets as of 01.01.2000
Assets as of 01.01.2004
Assets as of 01.01.2005
Assets as of 01.07.2006
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Ukrainian banks: Loans/1 (bn UAH)
Retail loans became main driver of lending growth
0
50
100
150
200
250
01.2
003
06.2
003
01.2
004
06.2
004
01.2
005
01.2
006
06.2
006
10.2
006
Total gross loans
Corporate loans
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Ukrainian banks: Loans/2 (bn UAH)
Average maturity of loans is shortening
0
50
100
150
200
250
01.2
003
06.2
003
01.2
004
06.2
004
01.2
005
01.2
006
06.2
006
10.2
006
Total gross loans
Long-term loans
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
0
500
1000
1500
2000
2500
3000
3500
4000
4500
End-2000 End-2001 End-2002 End-2003 End-2004 End-2005 Oct-2006
UA
H m
illio
ns
0%
2%
4%
6%
8%
10%
12%
Pe
rce
nta
ge
Non-performing loans NPLs to Total Loans
Improving loan performance
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
01.2003 06.2003 01.2004 06.2004 01.2005 01.2006 10.2006
Private deposits term
Private deposits sight
Corporate deposits term
Corporate deposits sight
Ukrainian banks: Deposits (bn UAH)
All deposit categories grow quickly, most dynamically private term deposits
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Household deposits: currency structure
Increasing share of savings in FX
58%
42%
UAH
FX
57%
43%
54%46%
53%
47%
07-01-2005 01-01-2006
07-01-2006 10-01-2006
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Top-10 Ukrainian banks by deposits (as of 01.07.2006)
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
Privat
Aval
Prom
inve
st
Ukrso
ts
Oscha
d
Ukrsi
b
Ukrex
imNad
ra
Fina
nsi Kre
dit
Ukrpr
omba
nk
Raiffe
isen
bank
UA (OTP)
Corporate deposits
Private deposits
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Clear distinction between retail, corporate strategies
0
5000
10000
15000
20000
25000
30000
35000
01.2003 06.2003 01.2004 06.2004 01.2005 01.2006 10.2006
Equity
Registered capital
Ukrainian banks: Equity (M UAH)
Equity increases quickly, in line with T.A.
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Top Ukrainian banks by equity
Ukrexim, Raiffeisen UA (OTP), are relatively better capitalised (Equity/T.A.) than their peers. Ukrprombank is the only in TOP-10 by equity not ranked in Top-10 by T.A.
0
500
1000
1500
2000
2500
3000
3500
Privat
Aval
Ukrexim
Prom
inve
st
Ukrsots
Ukrsib
Raiffe
isen
bank U
A (OTP)
Oschad
Nadra
Ukrpro
m
Brokb
iznes
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
(M UAH)
Ukrainian banks: after-tax profit (M UAH)
0
500
1000
1500
2000
2500
3000
3500
4000
2002 2003 2004 2005 2006 I.-IX.
Total
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
TOP-10 Ukrainian banks’ H1 2006 profit (M UAH)
86,8
187 180,2
27,5
140 148,5
81,4
168,5
120,5
27,4 20,8
020406080
100120140160180200
Privat
Aval
Prom
inve
st
UkrSib
Ukrex
im
Ukrso
ts
Osc
had
Raiffe
isen
UA (O
TP)
Nadra
Finan
si i K
redit
Brokb
iznes
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Substantial differences in the TOP-10 peer group
TOP-10 Ukrainian banks by H1 2006 profit (M UAH)
187 180,2168,5
148,5 140120,5
86,8 81,4
37,4 35,6 33,1
020406080
100120140160180200
Aval
Prom
inve
st
Raiffe
isen
UA (O
TP)
Ukrso
ts
Ukrex
im
Nadra
Privat
Oschad
ING U
AM
ria
FUIB
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Ukrainian banks: annualised ROA in % (for gross assets)
Quick improvement of profitability
0,6
0,8
1
1,2
1,4
1,6
1,8
2002 2003 2004 2005 2006 I-IX
ROA for all banks
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Ukrainian banks: annualised ROE in %
4
6
8
10
12
14
16
2002 2003 2004 2005 2006 I-IX.
ROE for all banks
Quick improvement of profitability
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Top-10 Ukrainian banks by ROA (net assets) in %
Ban
k O
dess
a,
Ode
ssa
(126
)
Reg
ion
Ban
k,
Kha
rkov
(129
)
Rai
ffeis
en U
A
(OTP
) (7)
Piv
dent
oban
k,
Don
etsk
(91)
Inve
stm
ents
&
Sav
ings
Ban
k,
Kie
v (1
46)
Ban
k N
adra
(8)
Mri
a (2
6)
Kre
dit-D
nipr
o,
Dne
prop
etro
vsk
(38)
Cal
yon
Ban
k U
A
(32)
Ban
k A
rkad
a,
Kie
v (5
4)
Ave
rage
for
the
bank
ing
syst
em
Only a few of the largest banks have above-the-average profitability
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Events 2006
• BIG Energy Bank• Stabilisation credit by NBU to Express-Bank• Restrictions by NBU on operations of Novyi Bank and Stolychnyi Bank• Small-scale Harant Bank collapses, NBU introduces temporary
administration in Kyiv Universal Bank• Interkontynentbank experiencing solvency problems
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Positive factors
• Proven crisis management ability of NBU• Steady growth of assets, deposit base, equity• Improving loan portfolio quality• Tightening of capital requirements by NBU• Increase of foreign ownership results in higher competition, better management
skills, improvements in risk management
Negative factors
• Quick increase of lending may raise concerns over banks’ risk management
systems• In case of economic downturn, asset quality may suffer in particular in Kiev’s
inflated housing market• In many cases, generally sound capital ratios are undermined by lack of
transparency of ownership• In many of the banks high overhead costs still result in relatively low profitability
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Business risks:• Opaque ownership• Level of owners’ support untested• Fragmented corporate client base• Aggressive growth strategies
Financial risks:• High credit risk concentrations• Significant exposure to related parties• Concentrated and volatile corporate customer base• Low capitalization• Progressively growing operating costs• Profitability generally low
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest
Expected tendencies
• Further increase of foreign ownership• M&A tendency to continue • Slow consolidation may speed up• Decreasing margins to force banks to improve cost control
Planned change in banking law
Foreign banks to be authorised to open branches in UA, subject to:• Co-operation of country of registration with FATF• Minimum statutory fund EUR 150 M• Unconditional guarantee of mother bank for the branch’s liabilities
15th BACEE Country and Bank Conference
14-16 November 2006, Budapest