Fitch seventh annual conference takes place in Ukraine.

By bne IntelliNews October 25, 2012
Fitch seventh annual conference takes place in Ukraine. During the conference, Fitch noted that Ukraine is in need of the International Monetary Fund financing. Fitch thinks that after the October 28 parliamentary election in Ukraine rapprochement to the IMF will be observed. The country's ratings can be revised downwards over crisis in the sphere of foreign financing, uncontrolled devaluation of the hryvnia, problems in the banking sector, and political instability. Moreover, Fitch predicts yearly average inflation in Ukraine 2.2% in 2012 and 6.5% in 2013. The agency forecasts, GDP will grow 0.5% in 2012, and nominal GDP will make USD 167.2bn. Under the forecast, GDP will grow 3.2% in 2013, and nominal GDP will stand at USD 170.1bn. Ukraine's gross public-sector debt, the agency estimates, will be 32.1% of GDP in 2012 at 32.6% of GDP in 2013. Fitch predicts that the current account positions balance in 2012 will me minus 6.6% of GDP and minus 5.2% of GDP in 2013. As to the agency, deficit of Ukraine's national budget is expected at 5.1% of GDP in 2012 and 3.8% of GDP in 2013. Fitch also predicts a 10% devaluation of the hryvnia to the dollar by 2013. Fitch supposes the early average hryvnia exchange rate will stand at 8.8 UAH/USD at the end of 2012, the same as in 2013. Fitch forecasts that the National Bank of Ukraine gold currency reserves will shrink from USD 29.254bn (as at September 30) to USD 27.1bn by the end of 2012. The agency predicts that the NBU reserves will dwindle to USD 26.2bn from USD 27.1bn in 2013. Fitch estimates the portion of overdue and restructured loans issued by Ukrainian banks at 48% of the total loans granted. The agency says lending growth was negligible in Jan-Aug, with moderate expansion in the corporate segment and a contraction in the retail portfolio, where loan repayments continued to outpace new lending. Developments in the retail segment also reflected regulatory restrictions on foreign currency lending, which have supported a notable shift to UAH-denominated lending from end-2009. However, FX exposures comprised a still high 51% of retail lending, and 39% of total sector loans at end-H112, and a further reduction in system dollarization could be difficult to achieve given current pressure on the UAH. Growth has been uneven across the sector, mainly driven by privately-owned banks, which have benefitted from continued retail deposit inflows and gradual recapitalisation. At the same time, Fitch is worried about lack of development strategy for recapitalised banks. The agency underlines, of the three financial institutions Rodovid Bank has become a so-called 'bad assets bank' but the process of its appropriate transformation is not over. The agency also points to the government banks in Ukraine retaining their market positions, including for expense of their support by the public-sector companies. At the same time, Fitch says foreign banks are losing a bit their market shares because of limited appetite for risks.

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