Ukrainian banks could see profit in 2012, say projections

Kyiv, February 28 (Interfax-Ukraine) – Ukrainian banks could see profits in 2012, a member of the Forum for Leading International Financial Institutions and Board Chairman of Raiffeisen Bank Aval, Volodymyr Lavrenchuk, said when presenting at a press conference at Interfax-Ukraine on Monday a consensus forecast drawn up by the forum's experts for the development of the country's banking system.

"The banking system in 2009 saw losses, in 2010 the losses reduced, in 2011 there were still losses… but in 2012 the banking system could see profits," the banker said.

According to the consensus forecast, the assets of the banks in 2012 will expand by 8.6% and in 2013 by 14.9%. Credits in 2012 will widen by 6.9% and in 2013 by 12.2%.

The experts say that credits issued to corporate clients will grow by 9.7% in 2012 and by 14.1% in 2013, while retail credits will narrow by 1.6% in 2012 and expand by 5.7% in 2013.

According to the consensus forecast, the main trend for banking sector development in Ukraine is the absence of long-term and cheap hryvnia resources.

"The key supplies of long-term financial resources are nongovernmental pension funds and life insurance companies. Even if the government launches pension reform, the banking system will obtain long-term hryvnia resources no earlier than after five years, so in the medium-term outlook there will be a lack of national currency resources, and they will be expensive," reads the document.

The experts said that the high cost of financing, inflation and large banking risks (credit, exchange rat and liquidity risks) will restrict the potential for reduction of credit rates.

The Forum for Leading International Financial Institutions was established in May 2010 to build a dialogue between the banks and the authorities. A total of 17 banks are members of the forum.