Lukashenko says he may quit as president
Belarus hits EU with tit-for-tat sanctions
Belarusian police introduce colour-coded torture system for detained protesters
Kremlin publicly condemns Belarusian police brutality in hint of growing frustration with Lukashenko
Russian services PMI rises to 48.2, but remains underwater as recovery continues to slow
Russia to start mass vaccinations on December 7
Azerbaijan’s Aliyev calls on Armenia, Russia, Turkey and Iran to assist in creating Nakhchivan land corridor
FPRI BMB Russia: Sberbank releases a three-year transformation strategy to e-commerce concern
Ukraine’s banking sector continues recovery, but profits still lagging last year
Ukraine’s real wages up over 10% in October but have been stagnant in dollar terms for almost a year
FPRI BMB Ukraine: Public has confused opinions on resolving the Donbas conflict
Western Balkans plus Ukraine subsidised coal with over €900mn in 2018-2019
Estonian parcel robot firm Cleveron eyes €30mn state loan
Estonia’s chief auditor says €1bn in state COVID-19 loans issued haphazardly
Economic sentiment in CEE falls in November as recovery momentum splutters
Estonian animation studio Imepilt to hold IPO
Brighter days ahead: The economic bounce back in 2021
Central, Southeast Europe stock markets jump in anticipation of COVID-free future
VISEGRAD BLOG: An easing of trade tensions but still an uncertain situation for export-oriented Central Europe
Hungary's PM risks isolation as Poland mulls dropping EU budget veto
Poland ready to back down from veto of EU budget
Hungary's ruling party in damage control mode after MEP sex scandal bombshell
Poland’s PMI remains stuck just above the improvement line at 50.8 in November
Czech companies dominate this year’s Deloitte Technology Fast 50 CE
Coronacrisis to get worse before it gets better forecasts wiiw
EU diplomats say no chance of Bulgaria removing veto for Skopje to start EU accession talks
IMF says downside risks to Albanian economy are increasing
EU ministers fail to agree on launch of accession talks with Albania and North Macedonia
Western Balkans commit to green agenda and regional common market at Sofia summit
Bosnia’s opposition ousts nationalist parties in major cities
Bosnia’s main ethnic parties fight to hold onto power in local elections
Southeast Europe’s EU members to get biggest boost from next budget and recovery funds
Bulgaria imposes 3-week lockdown to slow down COVID-19 spread
CEE politicians highlight trade and security ties as they congratulate Biden
Breakaway Transnistria fully under Sheriff’s control as Obnovlenie party sweeps board in parliament election
Moldova’s presidential election is over, now the battle for the parliament begins
Moldova’s foreign policy reset
Russian establishment quick to congratulate Moldova's new president-elect
Rising COVID-19 cases put intense pressure on CEE healthcare systems
MEPs urge European Commission to act against Hungarian media financing in North Macedonia and Slovenia
North Macedonia mulls decriminalising cannabis to boost tourism
Retail surpass pre-crisis peak as Romanians shop instead of holiday
Romania’s stability election
Romanian venture capital firm Catalyst launches new €40mn-50mn fund for TMT
The state is back in business
Slovenian PM Jansa stands alongside Hungary and Poland in EU rule of law row
BEYOND THE BOSPORUS: Turkish number crunchers deliver November inflation surprise of 14%
Erdogan needs to go says analyst assessing Turkey’s economic collapse
Ukraine strikes deal with Turkey to produce killer drones instrumental in Karabakh conflict
In Karabakh deal, as many questions as answers
Protesters flood Yerevan demanding Armenia’s “traitor” PM quit over Nagorno-Karabakh surrender
Who emerge as the real winners from the bloody Nagorno-Karabakh conflict?
Below average 2020 wine production destined for volatile and uncertain global market
Iran calls on Saudis to limit $67bn defence spending to Tehran’s $10bn
Iranian prosecutors pledge to pursue Trump for Soleimani killing even after he leaves White House
No reaction from Kazakh elites as bombshell FT report says Nazarbayev’s son in law siphoned millions from pipeline scheme
UK court freezes $5bn in assets connected to fugitive Kazakh banker Ablyazov
Attack of the Debt Tsunami: global debt soars to a new all-time high
Kyrgyzstan's proposed new constitution provokes widespread revulsion
Kyrgyzstan's China debt: Between crowdfunding and austerity
CFC joins RWC in assessing KAZ Minerals buyout offer as under-valuation
China business briefing: Not happy with Kyrgyzstan
Mongolian coal exports to China paralysed as Beijing demands virus testing of truck drivers
Mongolia fears economic damage as country faces up to its first local transmissions of coronavirus
Mongolia in lockdown after suffering first local coronavirus transmissions
Mongolia’s wrestling culture: From the grasslands to the cage
No surprises in Tajikistan as Rahmon retains presidency with 91% of vote
A Tajikistan poised on verge of economic calamity set for vote
Tajikistan revives on-off dispute with Iran
Turkmenistan: The dammed united
Turkmenistan: Everybody yurts, sometimes
Dirty money investigation reviews identified payments worth $1.4bn linked to Turkmenistan
Uzbekistan unveils extensive privatisation programme
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Ukraine’s banking sector’s performance in August was remarkably good given the negative impact on the economy from the coronacrisis. Bank assets have been rising strongly since the end of 2019 and continued to climb throughout 2020 to reach UAH1.6 trillion ($56.4bn) as of September. And the sector remains more profitable than in the crisis years following the Revolution of Dignity in 2014 but hasn’t quiet caught up with 2019, the banking sector’s first strong year of growth under the new regime.
The average profitability of the banking sector is struggling to take off and while earnings have stabilised at around UAH4bn ($141mn) a month for the whole sector, profits are still lagging the results of 2019, with a couple of duff months where the sector as a whole lost money.
The sector had an extremely good year in 2019, its first year of strong growth, and was on course to have an even better year in 2020 until the coronavirus (COVID-19) epidemic hit. The cumulative profits of the banking sector in September were UAH32.6bn, which is UAH16bn less than the same month a year earlier, but when compared with the UAH10.9bn banks had made by this point in the year in 2018 and the mere UAH1.4bn in 2017 then the sector appears to be on a solid footing.
That is backed up by the improving capital adequacy ratio (CAR) of the banking system, which was 21.4% as of September – a comfortable level for an emerging market and double the mandatory minimum requirement.
The cumulative profits are not rising that fast as the sector has had several bad months this year, losing money in June (UAH5.1bn) and making nothing at all in August.
Loans and deposits
The outlook for profits remains uncertain, as the country was going into a second wave of the coronavirus at the end of September and another lockdown is possible.
Retail lending has continued to rise steadily, up from UAH214bn ($7.5bn) in January to UAH225bn in September. Retail borrowing is expanding on the back of recovering incomes, but those incomes took a hit between December 2019 and June 2020, which saw more Ukrainians turn to bank loans for help. However, real income growth began again as the summer came to an end and made it easier for people to repay their loans.
Corporate lending has not fared as well. After a spike in borrowing in April as the lockdown came into effect when corporate borrowing jumped to UAH226bn, borrowing fell back again to UAH218bn in May, June and July. More recently in August and September corporate borrowing crept up again to c. UAH225bn.
On a year-on-year basis, retail borrowing is ahead of the last two years and well ahead of 2017. Corporate borrowing is behind last year’s level, although in the summer months was closing the gap and may overtake the 2019 level of borrowing if the increase in activity of the last two months continues.
The situation with NPLs continues to improve, with the overall banking sector average NPLs definitely below 50%, registering an average of 48% in September. However, the picture is very mixed.
The state-owned banks barely changed their exposure to NPLs, which remain stuck at 63.7% of their loan book. PrivatBank is the worst offender and has made only the tiniest dent in its portfolio of bad debt, reducing them from 81% of its loan book last September to 79.4% this year in the same month. Foreign-owned banks shaved 1.3pp off their NPLs and privately owned banks 1.5pp to 18.5% overall for the segment.
Dividing the NPLs up into corporate and retail and it becomes clear that the bulk of the gains in NPLs have been made in the retail sector, where the share of NPLs has fallen to 35.9%, but at the same time the rate of corporate NPLs has barely moved at 53.5% as of September.
This article is from bne IntelliNews Ukraine monthly country report. Sign up to receive the report to your inbox each month, which covers the slow moving macro- and micro-economic trends, the major political news and a round-up of the main sectors and corporate news. First month is free and you can unsubscribe at any time.
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