Transcript ***** 1

Joint Stock Company THE STATE EXPORT-IMPORT BANK OF UKRAINE
TRADE FINANCE IN UKRAINE:
CHALLENGES AND OPPORTUNITIES
Kyiv-2015
UKRAINIAN FOREIGN TRADE DYNAMICS
2014-2015 foreign trade turnover suffered severely
from unfavorable economic environment
160
100
90
150
80
70 27
65
22
-2.0
-6.7
Chemicals
109
58
60
22
19
51
40
57
15
11
27
30
20
-2.4
-8.7
-1.6
-3.1
-1.6
-2.2
Agriculture products
70
50
Machinery and equipment
Mineral products
-27%
85
90
Machinery and equipment import considerably declined
due to FX devaluation and
lack of investment capacity of Ukrainian corporates
40
43
32
10
2014
-1.8
Wood products
-37%
2014/2013 y-o-y chng in import, $bln
8
5
17 18
6
3
9
Machinery and equipment export suffered
from trade deterioration with the CIS market
HY2014
-0.7
-0.5
-0.3
-0.9
HY2015/HY2014 y-o-y chng in import, $bln
HY2015
Other import
Machinery and equipment import
Energy import
Goods export
Foreign trade turnover, $bln
Industrial goods
36
17
2013
-1.8
30
0
2012
Metallurgical products
Machinery and equipment
Metallurgical products
Chemicals
Mineral products
Source: the NBU
Observations:
-5.2
Source: the NBU
-1.6
-3.5
-2.6
-0.8
-2.1
-1.7
-1.5
Industrial goods
-0.9
Wood products
Agriculture products
 evident result of recent challenges for the economy
 demand for trade finance products substantially declined
 unutilized (idle) production capacities created untapped potential for growth
-1.2
-0.1
-0.3
-0.4
-0.4
HY2015/HY2014 y-o-y chng in export, $bln
2014/2013 y-o-y chng in export, $bln
Source: the NBU
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UKRAINIAN FOREIGN TRADE DYNAMICS (cont’d)
Goods import
Goods export
20
18
17 17 17
18
15
15
30
17
25
15
-35%
10
10
28 29
27
23
20
8
5
5
17
-45%
13
15
7
-22%
22
15
11
10
7
5
0
5
5
0
Russia
Europe
Export, 2012
Export, 2013
Asia
CIS (excl Rus)
Russia
Export, 2014 Source: Ukrstat
Europe
Import, 2012
Import, 2013
Asia
CIS (excl Rus)
Import, 2014
Reasons:
Reasons:
 deterioration of trade relations with Russia
 devaluation
 DCFTA with EU with grace period
 increased cost of funding, lack of sources
Source: Ukrstat
 lack of confidence between trade parties
What is next:
 trade with Russia is likely to deteriorate further
 trade with EU is expected to grow once DCFTA with the EU comes into full force in 2016
 need of industrial modernization will create demand on high-tech equipment (European countries)
 unrealized (postponed) foreign trade demand and supply will be satisfied in the near future
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UKRAINIAN FOREIGN TRADE DYNAMICS (cont’d)
Europe and Asia become the major trade partners of Ukraine
Trade deficit with Russia is now less then
trade surplus with Asia
Russia
Europe
Asia
6
CIS (excl Rus)
4
4
2
1
2
Russia
21%
2
1
+4%
Europe
36%
as at YE2014
-7%
1
0
Trade balance, 2012
-2
-4
Trade balance, 2013
-3
-65%
-6
-5
-8
-10
-12
Trade balance, 2014
-54%
-8
-10
-10
-11
Source: Ukrstat
Other CIS
countries
9%
Others
10%
Asia
23%
Source: Ukrstat
-14
Conclusions:
 fundamental shift in foreign trade geography to Europe and Asia
 market value of Ukrainian hryvnia contributes to harmonize foreign trade structure and current account balance
 healthy trade balance contributes to BoP objective which is Target #1 for IMF program successful implementation
 bottom out trends in the economy are expected and should be closely monitored to catch the momentum
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CONFIDENCE UNDER IMF UMBRELLA
IMF program scenario
-6.8%
-22%
62
7%
8%
8%
8%
8%
2%
3.5%
4%
4%
4%
-9%
-25%
55
2014
44 45
46 48
2015
2016
50 52
2017
54 56
58 60

Target
#1
2019
Goods imports ($ bln)
Real GDP growth (percent)
Turnover of goods trade
Source: IMF staff report July 22, 2015
guaranteed and state-owned entities
Bring the public and publicly guaranteed debt/GDP ratio
under 71% of GDP by 2020
Payment capacity objective
2020
Goods exports ($ bln)
 From external debt payments on the sovereign, sovereignDebt sustainability objective
62 65
Target
#2
2018
BoP objective
Generate US$15.3 billion savings in public sector financing
during the IMF program period
Target
#3
Keep the budget’s gross financing needs at an average of 10%
of GDP in 2019–2025 (maximum of 12% of GDP in any given
year)
Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), Press Release No. 15/404, September 6, 2015:
“I am extremely encouraged by the progress that has been achieved in the past few months. In a difficult environment, macroeconomic
stabilization is taking hold and the economy shows signs of turning the corner. This achievement is a tribute to the courageous work of the
Ukrainian authorities.”
“Policies are on the right track and have started to yield results. The fiscal position is getting stronger, the foreign exchange market has
stabilized, and the banking sector is being repaired so that banks are sounder and can start to provide credit again. The recent debt
restructuring agreement is a vital complement to economic reforms, and an essential step toward creating fiscal space, external sustainability,
and improved confidence.”
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SUSTAINABLE BANKING SYSTEM TO FACILITATE FOREIGN TRADE
Some observations and conclusions:
 Ukrainian banks will play a crucial role in future trade growth in their capacity of risk absorbers in foreign trade operations;
 stabilization of banking system enhances financing of trade;
 NBU takes reasonable measures to stabilize the situation and restore confidence to the Banking system;
 and first signs of bottom out trends can be already observed:
NBU stabilization measures:
 Cleaning up banking system
 Administrative measures on FX
operations and deposit controls
 Related party lending issues
 Bank supervision improvement
 Bank recapitalization and
resolution measures
 Addressing NPLs
Source: IMF staff report July 22, 2015
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UKREXIMBANK: ON THE RIGHT TRACK
Fitch: CCC
Moody’s : Ca
Successful reprofiling exercise released FX liquidity
… the upgrade reflects reduced refinancing risks, as the restructuring of the bank's
eurobonds (with a combined nominal value of USD1,475m, or 23% of end-1H15
liabilities under local GAAP) resulted in a significant lengthening of the external debt
maturity profile. At end-1H15, the bank's foreign currency liquidity (comprising cash
and equivalents and short-term interbank placements) was comfortably sufficient to
meet near-term wholesale funding maturities …
Fitch press-release August 11,2015
Public debt maturity profile
$mln
483
438
198
158
85
2019
2020
2021
2022
2023
75
2024
Diversified loan portfolio
38
YE2014 IFRS
2025
Strong liquidity buffer
UAHbln
92%
IFRS
92%
91%
79
71
57
62
66
72
2014
1Q2015
HY2015
Liquid assets (cash+AFS sec)
Amounts due to customers
Liquid assets-to-customer accounts
Transport and
communications
3%
Road
construction
Power 3%
utilities
3%
Construction
materials
4%
Rubber and
plastic
5%
Metallurgy
5%
Engineering
6%
Trade
12%
Agriculture and
food
17%
Extractive
industry
10%
Construction
9%
Other
8%
Real
estate
7%
Chemistry
9%
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UKREXIMBANK: TRADE FINANCE OPERATIONS
Ukreximbank clients enjoy TFP lines
from EBRD & IFC
Trade finance is one of the key directions of the Bank’s activity
 1’396 trade finance transactions were performed in the total amount of $3’793 mln
starting from 2006
Global trade finance program
 Share of trade finance funding in the cumulative amount of funds received by the Bank
Total limit: $80 mln
since 2006 amounts to about 36%
 145 transactions in the total amount of $401 mln were financed in 2014 - 2015 despite
substantial GDP drop, trade volume decrease and challenging operating environment
Total limit : $270 mln
Trade finance transactions dynamics (cumulative amount) , $ mln
3,734
3,793
3,392
2,190
2,333
2,477
2,702
Trade finance program
Trade finance transactions target structure for 2006-2015, $ mln
2,922
Documentary
operation
2,279
1,096
General finance
921
387
2006
2007
2008
2009
2010
2011
2012
2013
2014
8m2015
Source: Ukreximbank
Pre-export,
pre-import finance
& factoring
593
Source: Ukreximbank
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UKREXIMBANK: COOPERATION WITH LEADING ECAs
ECA covered loans (cumulative amounts), $mln
Great experience of cooperation with leading ECA
307
 Recognition as a direct Borrower / Guarantor by more then 36 world leading ECAs.
 136 projects amounting to about $400mln were financed under ECA coverage since 2002.
 Partnership with leading banks of Europe, Asia, USA and Canada.
333
349
356
362
2009
2010
2011
2012
389
200
130
 Prague Club membership.
2006
ECA covered loans by sectors, %
Other; 17.7%
Building
materials
Industry;
18.9%
2013
ECA covered loans by countries, %
Austria; 3.3%
Switzerland;
4.6%
Other;
8.8%
Germany;
38.4%
Japan; 6.3%
Pulp and paper
industry;
16.3%
Engineering;
8.8%
Agriculture
and food
processing;
13.8%
2008
Source: Ukreximbank
Metallurgy;
5.3%
Extractive
industry; 5.4%
2007
Sweden; 1.6%
France; 8.7%
Production of
rubber and
plastic goods;
13.9%
Source: Ukreximbank
Italy; 13.9%
Denmark;
14.4%
Source: Ukreximbank
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UKREXIMBANK: IFI RECOGNITION
Global Trade Finance Program
Energy Efficiency Programme
Export Development Project
EDP, EDP2 as well as additional
financing for EDP2
Total Amount: USD 100 million
Total Amount: USD 100 million
SME and Energy Efficiency Programme
Total Amount: USD 374.5 million
Energy Efficiency Project
Total Amount: USD 200 million
Small- and Medium-Sized Enterprise
Program
Total Amount: USD 50 million
Trade Facilitation Programme
Total Amount: USD 40 million
Total Amount: USD170 million
Program for Modernization of Industry
with Positive Environmental Impact
Loan for SMEs and Mid-Caps
Energy Efficiency Program
Total Amount: USD 50 million
Total Amount: EUR 100 million
Total Amount: USD 30 million
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KEY MESSAGES
Key messages:
 unrealized (postponed) foreign trade demand and supply will be satisfied in the near future
 subject to successful implementation of IMF Program, stable growth of economy and
increase in foreign trade volumes are anticipated already in 2016
 bottom out trends are expected and should be closely monitored to catch the momentum
 Ukrainian banks should become a driver to facilitate foreign trade growth
 Ukreximbank is uniquely positioned to serve export-import transactions of Ukrainian
companies
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