PrivatBank Reports UAH 1.4bn in Net Profi t for FY11

PrivatBank, Ukraine’s largest bank by assets, released its 4Q11 and FY 2011 UAS financials on Tuesday (Jan 31). The bank’s net interest income increased by 18.0% QoQ to UAH 2.7bn, while total income rose by 10.1% QoQ to UAH 4.0bn. Total income for FY11 amounted to UAH 12.8bn, a 34.7% YoY rise. The bank’s operating expenses increased by 14.9% QoQ in 4Q11 and by 30.1% YoY in FY11. The provisions for loan impairment declined by 7.6% QoQ in 4Q11, but for the whole year the bank’s provisions rose by 49.3% YoY. Net profi t amounted to UAH 446mn in 4Q11 and UAH 1.4bn in FY11.According to PrivatBank’s balance sheet, corporate loans increased by 19%  YoY to UAH 97bn, while retail loans rose by 27.5% YoY to UAH 26bn. The term deposits of legal entities decreased by 29% YoY while the term deposits of retail customers increased by 27%YoY. The loan/deposit ratio remained almost unchanged at 133.8%. 

COMMENTARY

As it has been the case for some time, the financial statements of Privatbank provide quite an outstanding picture in the context of the majority of other Ukrainian banks.  The bank reports a staggering 36.8% YoY increase in the volume of net interest income to UAH 7.9bn in 2011.  The fees and commissions income was also up by 37% YoY in 2011, with net fees and commissions staying at 3.3%, arguably the highest in the Ukrainian banking sector.  The Bank’s cost/income ratio stays at 40% for 2011.  The bank’s leverage, measured by loan/deposit ratio was stable at 134%, the level which was almost unchanged for the whole 2011. Privatbank’s bonds have recently fallen out of grace with investors and now yield 14.6% for the papers maturing in 2015 and 19% for the papers maturing in 2016.  In our view, these are very attractive yields for Privatbank’s bonds.