Transcript Ukraine - Міжнародний центр перспективних досліджень

Ukraine:
The Country
and Its Banking System
Andrew BLINOV
Senior Economist
International Centre for Policy Studies
Budapest, 15 October 2003
УКРАЇНА
UKRAINE
Republic
Independence: 24 August 1991
Territory: 603,700 sq. km
Population (2001): 48.5 mln
Capital: Kyiv (Kiev), 2.6 mln
Administrative-territorial units:
24 oblasts, Autonomous
Republic of Crimea, Kyiv and
Sevastopol cities
GDP per capita (2002, current
rate): US$860
Number of licensed banks
(2002): 157
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Presentation plan
1.
2.
3.
4.
5.
6.
7.
About the International Centre for Policy Studies
Macroeconomic Situation in Ukraine
Political Situation and Risks
Role of the Banking Sector
Non-Residents’ Share
Banking System Indicators
Risks and Challenges
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
About the International Centre
for Policy Studies
What is the International Centre
for Policy Studies?
• ICPS is an independent research organisation, founded by
the Soros-funded Open Society Institute in 1994
• Our goal is to promote public policy concepts and procedures
in Ukraine
• ICPS works with different interest groups — government,
business, NGOs, mass media
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
ICPS services
We offer the following services:
• public policy research
• economic and business research
• political analysis
• training for policy process participants
• facilitation of public dialogue
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Research fields
•
•
•
•
•
Economic policy
Public administration reform and policy research
Regional policy and local government
European integration
Educational and scientific policy
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Regular publications
•
•
•
•
•
•
Quarterly Predictions — a quarterly overview of Ukraine’s economy
and 3-year development forecast (the only product of its kind in Ukraine)
Political Commentary — an analytical bulletin that evaluates Ukraine’s
government policy and the various processes affecting it
Consumer Confidence — a unique for Ukraine quarterly survey of
household expectations, generating five standard indices
Economic Statistics — a monthly table of statistical data that are
important for doing business in Ukraine
Regional Trends — analysis and forecast of regional development and
regional policy
Policy Studies — journal publishing the results of ICPS research on the
most important issues of government policy, including an annual analysis
of the impact of legislative changes on the business climate in Ukraine
Information about ICPS services is posted on www.icps.kiev.ua
Internet shop launched in May 2003
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Business services
• Analysis of public policy alternatives and formulation of
recommendations; analysis and development forecasts for
specific markets
• Long-term forecast of macroeconomic and regional
development indicators
• Impact analysis of company activities, particularly investment
projects
• Analytical support for strategic planning
• Research on consumer behaviour
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Macroeconomic Situation
in Ukraine
GDP, real % change
10
9
8
7
6
5
4
3
2
1
0
9 ,2
6 ,0
5 ,9
6 ,5
6 ,0
4 ,8
2000
2001
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
2002
2003
2004
2005
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Factors prompting rapid growth
in early 2003
• A better price situation in global markets
• Increased capital investment to boost productivity, in
response to increased competition on the domestic market
• More activity in construction
• Higher personal incomes paralleled by growth in personal
deposits
• A surge in energy, gas, and water production and
distribution, due to the cold winter
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Forecast for 2003
The rate of growth, which peaked 8.6% as of H1’03, will slow
down to 6%:
• decreased agricultural output — poor grain harvest
• decelerated growth of global prices
• accelerated growth of imports compared to exports
• intensified political battles before the presidential election
will stymie the realisation of quality government policy
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
GDP of Ukraine’s trade partners,
and exports, %
21
GDP of trade partners
Export of goods and services
18
15
12
9
6
3
0
2000
2001
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
2002
2003
2004
2005
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
GDP, consumption and investment
% real change
16
GDP
Consumption
Invetsment
14
12
10
8
6
4
2
0
2000
2001
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
2002
2003
2004
2005
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Foreign direct investments, millions USD
1400
1200
1000
800
600
400
200
0
1997 1998 1999 2000 2001 2002 2003 2004 2005
Міжнародний центр перспективних досліджень
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Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Forecast of sector dynamics
% real change
20
2002
15
2003
2004
2005
10
5
0
-5
-10
Trade
Industry
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Agriculture
Transport
Construction
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Current account and trade balance
millions USD
4000
3000
2000
Current account balance
Trade balance
1000
0
-1000
-2000
1998
1999
2000
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
2001
2002
2003
2004
2005
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Real effective exchange rate promotes
development of foreign trade
• Real effective exchange rate for H1’03 depreciated by more
than 10%: this promotes export but can reduce import
• It is desirable to have yearly real depreciation rate within 5%
• ICPS has calculated the real hrynia effective exchange rate for
Ukraine’s 12 biggest trading partners, who account for 2/3 of
its foreign trade turnover. Since early 1998 it dropped by 65%
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Nominal exchange rate
UAH/USD
5.6
5.5
5.4
5.3
5.2
5.1
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
12'05
06'05
12'04
06'04
12'03
06'03
12'02
06'02
12'01
06'01
12'00
06'00
12'99
5.0
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Moderate price dynamics
Consumer prices will pick up by 6.5% in 2003:
• negative expectations regarding a decreased grain supply
and a smaller harvest
• producers prices grow faster
In 2004–2005, inflation will slow down to 5–5.5%. We expect
tightened administrative pressure across Ukraine’s regions,
aimed at maintaining price stability in 2004. The monopolies’
tariffs could be raised after the Presidential election in late 2004
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Price index dynamics, % annual change
10
8
6
4
2
Consumer prices
Producer prices
0
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Q4'05
Q3'05
Q2'05
Q1'05
Q4'04
Q3'04
Q2'04
Q1'04
Q4'03
Q3'03
Q2'03
Q1'03
Q4'02
Q3'02
Q2'02
Q1'02
Q4'01
-2
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Political Situation and Risks
Foreign policy priorities (I)
• Despite the fact that Ukraine has declared almost
20 countries as its strategic partners, we consider Russia,
the EU, and the USA to be the main vectors of Ukrainian
foreign policy
• After a period of poor relations with the West and a drift
towards Russia during 2001–2003, Ukraine is rapidly
renewing its dealings with the USA and the EU
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Foreign policy priorities (II)
• Joint projects with Russia: (1) Common Economic Area,
(2) Gas Transport Consortium, (3) the Odesa–Brody Pipeline
(transporting Caspian petroleum to Western Europe)
• Improving relations with the USA and the European Union
is motivating Ukraine to carry out domestic economic and
democratic reforms
• The EU considers Ukraine as its ‘new neighbour’
• Ukraine sent its peacekeeping troops to Iraq (Polish sector)
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Political competition
• In November 2002, the forming the Cabinet of Ministers on
the parliamentary majority basis idea was realized—this
improved the political competition in Ukraine
• The effectiveness of government policy is dubious: with
insofar as pushing through tax and pension reforms,
resuming privatisation of large enterprises, and fostering new
market-oriented laws, Viktor Yanukovych’s Cabinet clearly
lacks a consolidated strategy and is very passive concerning
vital social issues, payments discipline, and reforms of
monopolies
• Though Viktor Yuschenko of Our Ukraine bloc is the most
likely to win the Presidency in 2004, changes in the
Constitution could negate his advantage
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Ukraine’s sovereign ratings
Agency
Rating
Forecast
Issuer Credit Rating — B
Stable
Moody's Investors
Service
Long-term bonds and notes — B2
Long-term bank deposits — B3
Stable
Fitch
Long-term foreign currency — B+
Short-term foreign currency — B
Long-term local currency — B+
Stable
Standard&Poor’s
Rating&Investment
Information Inc.
(R&I)
Long-term foreign currency — B+
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Stable
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Development at risk
Economic development of Ukraine is still very vulnerable:
• failure to maintain a single, clearly set course of economic
development
• unsatisfactory capitalisation of the economy
• low mobility in the workforce
• overly sluggish process of de-monopolisation
• weakness of many state institutions
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Risks to ICPS forecast
The chief risks to the above forecast are:
• destabilised political situation prior to the 2004 election
• rapid integration of Ukraine into the Common Economic
Area
• unlikelihood of good harvests in the mid-term
• abrupt deterioration among external markets
• a jump in domestic prices
• lower tax revenues than expected in 2004
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Role of the Banking Sector
The banking system of Ukraine
• Leader in fundamental economic and technological change in
Ukraine
• This sector is more dynamic than the economy as a whole
• Still not well integrated in international banking
(as of 1 August 2003 assets amount to 16 billion USD,
with capital totaling only 2,06 billion USD, compared
with a GDP of 46 billion USD)
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Assets (total, active transactions reserves included)
and liabilities to GDP
40%
35%
Assets/GDP
Liabilities/GDP
30%
25%
20%
15%
2000
2001
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
2002
Jan-Jul 2003
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Capitalisation of the banking system
in Ukraine
18%
4.6%
16%
4.4%
14%
4.2%
12%
4.0%
10%
3.8%
8%
6%
4%
2000
Charter capital/assets
Capital/assets
Capital/GDP
2001
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
2002
3.6%
3.4%
3.2%
Jan-Jul 2003
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Profit, millions USD
140
120
100
80
60
40
20
0
-20
2000
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
2001
2002
Jan-Jul 2003
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Closer watch over banking system
• Intensified after 1998 financial crisis
• Major issues:
– more effective policy of bank insolvency and bankruptcy
– increased minimum charter capital requirement
– increased reserves under active transactions from 61% in 2000
to 96% in 2003
– toughening of liquidity ratios (economic normatives)
– special attention to banks’ shareholders who own more than 10% and
to loans to insiders
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Liquidated banks
24
Excluded from the State Bank Register
21
Banks under liquidation (bank licence withdrawn), 2000–2003
18
16
15
12
11
12
11
10
9
9
10
9
6
3
5
3
1
3
1
0
95
9
1
96
9
1
97
9
1
98
9
1
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
99
9
1
00
0
2
01
0
2
02
03
0
0
2
'2
1
H
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Number of banks in Ukraine
250
230
229
227
200
214
203
195
189
182
179
150
100
50
0
5 996 997 998 999 000 001 002 003
9
9
2
1
1
1
1
1
2
2
2
H1'
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Minimum charter
capital requirement escalation
• According to the Law “On banks and banking activity”, since
17 January 2003 the minimum charter capital value should
not be less than:
– for nationwide Ukrainian banks — €5 million
– regional banks — €3 million
– cooperative banks — €1 million
• Later on, the National Bank of Ukraine plans to upgrade such
requirements for nationwide Ukrainian banks (transactions in
foreign currency allowed) up to €10 million
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Charter capital structure
100%
80%
60%
40%
20%
0%
1998
Up to €3 mln
€3–5 mln
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
2000
€5–10 mln
2002
More than €10 mln
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Non-Residents’ Share
Foreign capital banks role
250
11
1
200
12
2
16
6
19
9
22
8
24
15
7
6
13
164
168
162
150
100
50
0
218
215
205
186
173
7
13
7
159
With participation of foreign capital
With 100% foreign capital
With 100% Ukrainian capital
3
1
6
7
0
2
5
8
9
199 199 199 199 199 200 20 0 200 H1'200
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Foreign capital in the banking system
of Ukraine
• Share of foreign capital in the charter capital of banks totals
13%
• There are 7 purely foreign banks, but actually – about 10:
–
–
–
–
–
–
–
–
USA: Citibank Ukraine
France: Credit Lyonnais/Credit Agricole Ukraine
Netherlands: ING Bank Ukraine
Germany: HypoVereinsbank Ukraine
Austria: Raiffeisenbank Ukraine
Poland: PEKAO Ukraina Ltd.
Russia: Alpha-Bank, NRB-Ukraine, Petrocommerz-Ukraine
Microfinance Bank
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Banking System
Indicators
Balance capital structure
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
10.0%
11.4%
6.2%
6.7%
6.0%
6.9%
19.3%
15.6%
Other capital
Reserve fund
Current year activities
result
57.8%
60.1%
Previous years activities
results
Charter capital
2001
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
2002
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Assets structure
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1.8%
4.1%
7.1%
8.6%
15.2%
1.8%
2.1%
7.3%
Other assets
6.5%
13.3%
Accounts receivable
Fixed and intangible assets
Securities
63.2%
69.0%
High-liquidity assets
Loans portfolio
2001
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
2002
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Liabilities structure
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
15.1%
1.1%
2.8%
3.9%
9.1%
1.5%
2.4%
3.2%
11.9%
11.0%
28.4%
Other liabilities
Loans from other financial
institutions
NBU funds
35.4%
Budget & non-budget funds
Interbank credits & deposits
37.7%
36.5%
Personal funds
Companies funds
2001
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
2002
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Loans structure
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
0.6%
0.4%
4.3%
7.0%
12.3%
10.9%
Loans to public authorities
Loans to individuals
82.8%
81.7%
Loans to other banks and
NBU
Loans to companies
2001
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
2002
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Income structure
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2.6%
2.9%
4.2%
6.4%
26.7%
24.8%
Other income
Merchandising (non-bank
trade operations)
66.5%
65.9%
Commission fee
Interest income
2001
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
2002
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Expenditures structure
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
4.1%
3.1%
38.9%
41.1%
6.0%
3.1%
13.1%
6.1%
2.8%
9.5%
34.8%
37.4%
Other expenditures
Other non-bank
operational expenditures
Other bank operational
expenditures
Corporate income tax
Reserve assignments
Interest expenditures
2001
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
2002
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Banking indicators and GDP growth
% nominal change
60
Gross domestic product
50
Banks liabilities
40
20
Total bank assets
47
38
37
31
30
Total loans
34
29
26
29
26
22
9
10
8
0
2001
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
2002
Jan-Jul 2003
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Loans to economy, billions UAH
80
70
60
50
Total loans
Corporate loans
Long-term loans
Bad debts
40
30
20
10
0
2000
2001
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
2002
Jan-Jul 2003
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Bank deposits, billions UAH
80
70
Banks liabilities
60
Corporate deposits
50
Individuals deposits
40
30
20
10
0
2000
2001
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
2002
Jan-Jul 2003
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Risks and Challenges
Problems of the sector: exogenous factors
• Weak assets diversity (lack of financial instruments, weak
non-bank financial sector, restrictions on capital flows)
• Poor adaptation to international standards, including
Basel requirements
• Ukraine is still blacklisted by the FATF as a non-cooperative
country
• Absence of a full-fledged register of borrowers and real
estate
• The creditors’ rights need to be improved: borrowers have
more rights
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Problems of the sector: inner factors
• Low level of financial mediation: credits to GDP ratio (as
well as deposits to GDP ratio) is less than 25%
• Disproportionate rates of growth of individual deposits and
loans to individuals, relatively high interest rates on
deposits (significantly higher than on government bonds)
• Balance capital rates of growth are lower compared to
money mass and liabilities
• Absence of long-term (5+ years) loans, lack of mediumterm (1+ years) loans
• Large share of bank self-expenditures (often for non-bank
activity)
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Tasks
• Increase capitalisation
• Improvement of management and internal audit quality
• Improvement of outside audit with more attention to the
norms of international accounting standards
• Launch of new effective NBU system of control over
banking risks
• Transparence of banking operations with more
responsibility for bank secrecy disclosure
• Lobbying of indispensable legislation to improve creditors’
and investors’ rights
Міжнародний центр перспективних досліджень
International Centre for Policy Studies
Tel. +380-44-236-4477
Web: www.icps.kiev.ua
Thank you for your attention
Ukraine:
The Country
and Its Banking System
Andrew BLINOV
Senior Economist
International Centre for Policy Studies
Budapest, 15 October 2003