Photo from UNIAN, by Volodymyr Hontar
The net profit in the first quarter of 2021 grew significantly from the previous one.
Ukrainian banks' net profit shrank by 32% in January-March 2021 (Q1), to UAH 10.9 billion (US$392.8 million) from over UAH 16 billion (US$576.6 million) year-over-year (y-o-y).
Read alsoNBU eases rules for Ukrainian companies to place eurobonds
The major impediments holding back the growth in the sector's profitability in Q1 2021 were changes in the fair value of securities. The overall result of trading and revaluation transactions was UAH 5.1 billion (US$183.8 million) in losses, down from UAH 7.7 billion (US$277.5 million) in profit in Q1 2020.
At the same time, loan loss provisions made by banks in January-March 2021 shrank by 58.3% y-o-y, to UAH 2 billion (US$72 million). In the same period of 2020, banks accumulated UAH 4.7 billion (US$169.4 million) in loan loss provisions.
The recovery in demand for banking services, amplified by the sustainably lower cost of funding, had a positive effect on the banks' interest income, the report said.
Net interest income rose by 21.9% y-o-y against 6.8% y-o-y a year ago. The growth in cashless transactions fueled an increase in net commission income in January-March 2021 by 15.1% y-o-y, up from 7.9% y-o-y in the same period of 2020.
"Net interest and commission income is currently sufficient to cover the administrative costs of most banks," the report said.
As of April 1, 2021, some 66 out of 73 solvent banks were profitable, with seven banks taking a total of UAH 100 million (US$3.6 million) in losses.
In addition, the sector's profits became less concentrated: the five most profitable banks generated 57% of all profits compared to 83% in 2020.
Ukrainian banks' net profit shrank by 59.1% in January-February 2021 y-o-y, to UAH 6.491 billion (US$233.9 million).