Last year was marked by significant losses for banks: almost all the major institutions completed it with losses due to deterioration of the quality of the loan portfolio. Of the 30 billion hryvnia losses suffered by the largest institutions, two-thirds were sustained by state-owned banks, but the last year has been challenging for all market players, without exception. The current year will be easier, but not much.

State losses
The largest banks in the country lost 30 billion hryvnia last year. 21.1 billion UAH losses were incurred by state institutions, the largest loss was incurred by Ukreximbank (-9.8 billion USD). From the financial statements of the banks follows that the losses were caused by the provisions for troubled loans. For this purpose 17 billion UAH were spent during the year. And the portfolio of unrecoverable loans of Ukreximbank reached 22.4 billion UAH. The bank did not comment on the negative financial result to FinMaidan.

Oschadbank second – it lost 8.5 billion UAH, also because of the building up of the reserves (12.2 billion UAH). This state-owned bank credited the construction of solar power plants in the Crimea under the previous government, but after the Russian annexation of the peninsula, the loan servicing stopped. The losses of Ukrgasbank (-2.8 billion USD) are considerable, but in several times less. Management of the bank explained this deteriorating of the quality of the loan portfolio with the annexation of the Crimea, the insolvency of the debtors, as well as depreciation of fixed assets in the east.

Write-off to reserves
Prominvestbank was ranked third in terms of losses (-3.45 billion UAH). "Net profit obtained by the bank in the first nine months amounted to 1.077 billion UAH, but the need to form reserves caused a technical loss of 4.531 billion UAH based on the four quarters", - press service of the bank said.

The thesis "if it were not for the annexation of the Crimea, the war in the Donbas and the devaluation of the hryvnia, we would remain profitable" runs through exculpatory releases of almost every bank.

In Raiffeisen Bank Aval (loss of 1.37 billion USD) they say that the devaluation of the hryvnia means for them not only loss, but also additional income.

Went into a plus

Only five major institutions gained profit last year: Privatbank (749 million UAH), VTB Bank (642 million UAH), Sberbank of Russia (108 million UAH), FUIB (54 million UAH), and, surprisingly, the bank "Delta" (46 million UAH), which has difficulty with returning deposits for already a year. "Delta Bank was able to make a profit due to the increase of income: interest income increased by 41% - to 1.9 billion UAH, commission by 10% (315 million UAH), other operating income by 248% (1.1 billion UAH). This is the result of actions aimed at selling loans to customers. Income on return of previously written off assets increased by 323% (432 million UAH), the press service of the bank reported.

FUIB, owned by Donetsk businessman Rinat Akhmetov, finished the year with a profit. "We had to significantly restructure the business model, to do a great job to improve efficiency and to generate a large amount of reserves, primarily in the Crimea and the eastern region. We were able to increase our operating income from 2.4 billion UAH to 3.7 billion UAH, we have started to control closer all expenses of the bank. In the past, FUIB received a record ratio of operating income to expenses (coefficient C/I amounted to 30.7%) - we have earned 3 UAH of income on each hryvnia spent for operating expenses," explains FUIB's Chairman of Board Serhiy Chernenko.

Sad Future
Bankers' expectations about the potential risks in 2015 are fairly pessimistic. Stress test, which was conducted last year, did not take into account losses in the Crimea and the Donbas. But even without these factors it identified the need for recapitalization of the largest banks by 56 billion UAH. This means that the threat of losses will continue during this whole year. Besides, the idea of the second stress test, which will show the real need of banks for capital is now being discussed.

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