Ukraine's banking sector earns all time high cumulative profits in 8M23, but month on month, earnings growth slows a little
Ukrainian banks continued to earn strong profits in the first eight months of 2023, recording a profit of UAH 95.1bn ($2.5bn), according to National Bank of Ukraine (NBU) data, NV reported on September 27.
This figure was a whopping 11.3 times higher than the earnings for the same period in 2022, which amounted to UAH 8.4bn ($226mn). (cumulative chart).
On a month-on-month basis the rate of earnings growth slowed somewhat to UAH11,922mn in August from UAH15,530mn, in July, the best result this year. (monthly chart)
The strong performance represents an all-time high in Ukrainian banking history according to the NBU. Prior to this, the highest net profit for the first eight months of a year was seen in the pre-war year of 2021, with UAH45.6bn ($1.2bn), surpassing the figures of UAH 32.6bn ($878mn) in 2020, and UAH 44.3bn ($1.2bn) in 2019.
The slow down month-on-month in August was the fifth-highest monthly figure for the year in terms of profit.
The net interest income of Ukrainian banks for the first eight months of 2023 reached UAH 129.3bn, a notable increase of 40.8% compared to the same period in the previous year. Additionally, net commission income amounted to UAH 33.4bn ($900mn), marking a 14.1% rise.
When compared to July, net interest income increased by only 1%, reaching UAH 17.91bn ($482mn), while net commission income grew by 2.1%, totalling UAH 3.92bn ($106mn).
The decrease in profits in August can be attributed to several factors, including a 5.3-fold increase in provisions, reaching UAH 1.62bn ($44mn), a 24.2% rise in other operating expenses, totalling UAH 1.47bn ($40mn), and a 37.8% increase in income tax, amounting to UAH 2.65bn ($71mn).
In total, banking reserve contributions for the first eight months of 2023 amounted to UAH 6.5bn ($175mn), whereas during the same period in the previous year they were at UAH 89.4bn ($2.4bn).
Despite lapse in demand, firms said to retain positive attitude on 12-month outlook for activity, which remained historically elevated. Inflationary pressures continued to retreat.
Industrial prices in Romania increased by 2.4% in September-October.
GDP also up by 0.2% quarter-on-quarter as trade surplus makes up for lower domestic demand.
Russian service providers recorded a modest expansion in business activity during November, according to the latest PMI survey from S&P Global, but the rate of growth slowed somewhat from October.
Largest number of jobs created in construction, IT&C and hospitality sectors.
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