Ukrainian Banks Income Surged 81% in Jan-Feb 2009

Banks in Ukraine saw 81% increase in income in January-February 2009 due to higher foreign investments and the increased credit demand in the country.

According to the National Bank of Ukraine (NBU), Ukrainian banks recorded a YoY increase of 81% in their incomes in January and February 2009, as reported by UKRAINIANJOURNAL.

As compared to the income of UAH 14.4 Billion in January and February 2008, the Ukrainian banks recorded UAH 26 Billion in January-February 2009. There was an increase of 95% in their expenses that reached UAH 24 Billion in January-February 2009 from UAH 12.3 Billion during the same period previous year. A total of 185 banks were operating in Ukraine as of March 1, 2009.

The Ukrainian banking sector has been showing high growth potential and is the leading as well as most dynamic sector in the country. The competition is constantly increasing and the recently made crucial acquisitions indicate to the strong flow of foreign capital in this sector.

According to a recent report by RNCOS, the Ukrainian banking sector has been growing exponentially for past few years and that has appealed to foreign investors. Higher credit requirement by the Ukrainians and growing investment opportunities in the country are the prime factors backing this commendable growth in the banking asset value.

The banking industry’s dynamics along with the latest prophylactic measures adopted by the authorities reflect that the Ukrainian banking sector is on the verge of witnessing dramatic changes which would enable the industry to achieve higher level.

However, the beleaguered financial sectors in countries like Latvia and Ukraine could have disastrous effects on the rest of Europe, resulting into failures of banks across the country.

The government should take initiatives to avoid concentration of foreign investment in the country to maintain domestic competition at high level. The priority should be given to the services provided by new entrants and their reliability instead of thinking who acquire the bank locals or foreigners.

According to a Research Analyst at RNCOS, “Income of the Ukrainian banking grew significantly in January-February 2009. However, most of the banks are required to boost the capital in wake of an outflow of deposits as well as the difficulties in making loan-repayments in the present financial scenario. Financial intermediation in the country is yet limited and all segments of the sector remain underdeveloped.”