Despite a challenging operatingbackground in Ukraine underpinned by the weakeconomic environment as well as turbulent political situation, our financial institution delivered steady financial results. Having increased its profit and demonstrated sustainable growth dynamics, Oschadbank remained a reliable partner to its customers and business partners.
Please find below the main financial highlights in brief.
· Net profit for the year ended 31 December 2013 reached UAH 711.2 mln versus UAH 662.7 for 2012, a 7.3% increase YoY. The return on average equity (ROAE) amounted to 3.9%, compared to 3.8% in 2012.
· Net interest income before provisionrose by 4.1% YoY and reached UAH 5.5 bn as of the year end 2013, bringing the net interest margin to a still very strong 5.7% (6.4% – 2012). Net interest income before provisions remained the main contributor to the bank’s operating income and accounted for 80 % of the total operating income before provision charges for loan impairment.
· Net non-interest income grew by 4.2% YoY to UAH 1.3bn and was mainly driven by proceeds from off-balance, plastic cards, foreign exchange and settlement and cash operations.
· Operating expenses increased by 10.0% YoY to UAH 3.5bn as of the year end 2013, with staff and administrative costs remaining the main driver on the back of bank’s business expansion, outlets rebranding and ongoing IT and technology development. This resulted in the cost-to-income ratio of 50.9% vs. 48% for 2012.
· Provision charge for impairmentlosses amounted to UAH 2.4bn, translating to Cost of Risk ratio of 4.7 %, compared to 5.3% for 2012.
Statement of financial position:
· Total assets grewby 21.9% YTD to UAH 101.7bn, securing for Oschadbank the second place by total assets among the Ukrainian banks as of the year end 2013.
· Gross loan book totalled UAH 64.2bn in 2013, picked up by 4.8% YTD for the account of new loans to privately-owned corporate businesses in prioritized fields such as food and agriculture, energy, retail, production of natural resources and other export-oriented sectors growth potential.
· Loans to Naftogaz kept on decreasing during 2013 and fell down to 23.8% of the bank’s gross loan book as of the year end 2013, compared to 33.1% in 2012 and 58.1% back in 2009.
· The ratioof NPLs, defined as loans overdue by more than 90 days (any principal or interest amount), to gross loan portfolio amounted to 10.8% as of the year end 2013 (vs.7.3% – 2012), partially explained by considerable decrease (by ca. UAH5 bn) of loans to Naftogaz, shadowing the total loan book as well. Loan loss provisions, covering NPLs for a comfortable 174%, were up by 20.8% YTD and equalled UAH 12.1bn or 18.8% of total loans in 2013 vs. 16.3% at the end of 2012.
· Customer accounts,remaining the core source of funding,increased by 19.4% during 2013 and amounted to UAH 46.4bn, outperforming the sector average. Retail and corporate balances with Oschadbank rose in 2013 by 20.9% YTD and 14.5% YTD, respectively. Net loans-to-deposits ratiodecreased further to 112.4%, compared to 132.1% a year before.
· Total equity increased by 8.1% YTD to UAH 19.2bn for the account of a new UAH 1.4 bncapital injection and retained earnings.Oschadbank’s capitalization remains strong with the capital adequacy ratio of 24.7% and Tier 1 ratio of 23.2%, well above the regulatory minimum (27.9% and 25.1% as at year end 2012, respectively).