Ukrainian banks can’t earn on the difference in exchange rates

Exchange rates in Ukraine does not change

In brief: New challenges brought Ukrainian government to domestic banks. Earnings in foreign exchange rates froze.

Hryvnia has remained stable against the U.S. dollar. At the same time in the last three months the rate is kept at a level below 8 UAH / USD. Exchange rate fluctuations are almost invisible, in May, the value of the course thrilled at around 7,92-7,93 UAH / USD. In such circumstances, banks are almost lost one of the main sources of income – income from foreign exchange.

According to NBU, for I quarter 2010 financial institutions were able to earn foreign currency transactions of 337 million UAH., Or less than 10% of their commission income. This is less than that of the first quarter of last year, more than 5 times. Back then, “monetary” income of banks amounted to 1.8 billion UAH. Or more than 46% of total fees. Overall, in 2009 the Bank received from foreign currency operations 4.1 billion UAH., Or 25% of total commission income. Note: the final financial results from foreign exchange transactions of banks, under the version of NBU, consists of two parts. The first – a profit from currency trading. As a result I quarter of this year, 147 banks had a profit of approximately $ 500 million UAH. The second – the result of currency revaluation on the balance of the bank, due to changes in exchange rate. Given the strengthening of the hryvnia most of the financial institutions have suffered under this heading losses totaling 163 million USD. As a result, in January – March 2010 125 banks benefited from currency transactions. Most of all earned Privatbank – more than 152 million UAH. It is noteworthy that the list of leading trade currency thus Dnepropetrovsk AktaBank, which in terms of assets is the 7 th place in the top ten Ukrainian banks. This financial institution was registered in the National Bank of April 2008 AktaBank is part of the trade-industrial corporation “Aleph” (Dnepropetrovsk, a diversified corporation engaged in agribusiness, real estate, transportation, since 1995). At the same time, some financial institutions since the beginning of the year suffered from transactions in foreign currency losses. The biggest losses are mainly due to revaluation of foreign currency reserves have Prominvestbank. “We have been open long position on euro. Then the euro has begun to decline, but we needed the hryvnia for credit in the economy, so we sold the currency by fixing the damage,” – says Vladislav Kravets, a board member of Prominvestbank (Kiev, since 1992 ., 10 thousand.). Negative results also demonstrated that some banks with foreign capital (Ukrsotsbank and Swedbank), as well as the problem “Nadra Bank” and “RODOVID Bank. Surveyed bankers confirm the sharp drop in earnings on the currency. As noted in a conversation Vyacheslav Molodkin, director of Treasury’s Alfa-Bank (Ukraine) (Kiev, in 2001, 5 thousand people.) “You rightly pointed out the trend and to assess the scope to reduce wages.

At the same time, market participants are referred to as other reasons for the reduction of income, than the stability of the hryvnia exchange rate against the dollar. According to participants, their earnings have decreased because of regulatory innovations.

“The main factors – the increase PF levied when buying foreign currency, as well as sufficiently stringent standards of the NBU in the amount of open foreign currency position,” – says Mr. Molodkin.

Indeed, since 2010 more than twice the fee was increased to the Pension Fund, levied when buying non-cash currency. This was due to the failure within the state budget for the current year. If in 2009 this collection amounted to 0,2% of the amount of currency purchased, then this year during the first five months – 0,5%. Note: the Law on State Budget-2010 provides complete abolition of the levy on 1 June. However, the new rules of calculation of currency positions, approved by the NBU in the spring of 2009, significantly restricted the ability of banks to buy foreign currency on its balance sheet for the implementation of speculative transactions.
Eurosceptics claim

Recently, domestic banks appeared prerequisites for earnings on the euro. As previously reported, the euro against the dollar (and, accordingly, the hryvnia) ranges from 1,21-1,26 USD / EUR. However, bankers can not yet boast of significant earnings. The reasons for this situation is called multiple. “Firstly, our own position on the euro in banks is much less than a dollar. Secondly, the euro is less than a dollar, is used in international payments. In this regard, the bank can not earn a lot of the exchange rate difference when buying foreign currency for customers. Third, the euro is difficult to predict, therefore, unlikely someone understands what it will be tomorrow, “- says Pavel Krapivin, first deputy chairman of the bank” Contract “(Kiev, since 1993, 130 people). . As is known, the total foreign exchange revenue banks receive from the sale and purchase transactions in the interbank currency for corporate clients, their own arbitrage operations within the limit of foreign exchange position, as well as from trading cash currency. This bank fees from the purchase of non-cash currency on behalf of clients are often determined individually, depending on the volume of operations. However, the average tariff is about 0,5% of transaction amount. Recall: in addition to commissions for buying and selling currencies client bankers traditionally earned on exchange. So, buying on behalf of the client’s currency on the interbank market for one course, they actually sell it for that client at a higher rate. This “currency” proceeds the financial institutions do not always depend on the volume of transactions. In this regard, revealing that the circulation of non-cash market in the I quarter of this year grew from month to month.

Similar trends have been observed for the market cash. Note: In May, the share of euros in turnover of domestic interbank foreign exchange market ranged between 18-34%. This is not surprising, since, according to the National Bank, in 2009, Ukrainian companies paid in euros 25% of imports. At the same time exporters received only 13.7% of revenue in that currency. Representatives of major banks assure us that do not make speculative transactions. “Basically, we do not try to play the currency fluctuations, hold conservative policy. Even now try to keep their own private currency position on the euro. Medium-sized and small banks to play the course easier”, – said Vladimir Kravchenko, director of treasury at Raiffeisen Bank Aval “(Kiev, in 1992, 17 thousand.). Agrees with his colleague Vladislav Kravets: “We have banks that are able to make good on the euro.” In some financial institutions refrain from commenting on exchange earnings. “I will not comment on monetary position of our bank in the euro”, – said Vyacheslav Molodkin.

However, bankers point out a sharp decrease in income from foreign exchange transactions on the cash market. It is all because of NBU № 538 from 09.09.2009, according to which banks can not change the course of purchase and sale of foreign currency in cash during the working day.

“Thus, the euro banks not only earn, but also bear the losses. Let’s say I am taking a course set 9,6 UAH / EUR, and during the course of the day fell. The next day I had to sell foreign currency to 9,5 UAH / EUR. The only solution in such a situation – is to improve margins. For example, the euro is now at 20 kopecks., while the dollar – only 4 cop. “- says Igor Lvov, the deputy chairman of the bank “Finance and Credit” (Kiev, in 1992, 5 thousand).. However, according to a banker, a high margin reduces the competitiveness of banks in comparison with the black market. It should be noted that some treasurers on condition of anonymity, called the completely different reasons, that domestic banks did not get to make on fluctuations of the euro, although the year before they got a good income, taking advantage of the instability of hryvnia against the dollar. “The fact that the hryvnia exchange rate – the dollar is largely dependent on the position of the National Bank. People who have access to insider information to make the right steps – time to buy or sell currency. In the case of the euro on such information can not count. That’s the banks and not want to risk it, “- explains the vice-chairman of one of the banks, who requested anonymity.

Firm price

In the near future the national currency is likely to remain stable against the dollar. In any case, it is of such developments asserting the National Bank. They considered it premature to considerable enhancement of the national currency, despite the excess currency supply over demand. “To say that the time to build a course, there is no way. Sooner say that the economy has earned at 100% and a stable revenue comes from exports. In addition, investment is still small,” – said Alexander Arsenyuk, Deputy Director of Monetary Policy National Bank. Thus, the regulator will continue to buy excess foreign exchange supply in their own reserves. Note that the March / April National Bank replenish their reserves by more than $ 2.2 billion According to preliminary data, in May, the regulator has acquired on the interbank market is about $ 800 million in spite of these advances, the end of May the volume of gold reserves fell. Is because of all the sharp depreciation of the Euro-, which was nominated nearly a third of the reserve assets of the regulator. At the same time, the net inflow of foreign exchange continues to grow. Thus, according to results of April a positive balance of payments totaled $ 1.3 billion, while in March the figure stood at $ 1 billion in core income continues to go on account of financial (capital) transactions. At the same time an important figure as foreign merchandise trade balance remained in the negative. Following April imports exceeded exports by $ 400 million in such a situation can hardly speak of the stability of the currency market. Surplus currency may be sharply replaced by a deficit, should investors start withdrawing their speculative capital from Ukraine. By the way, are all prerequisites to precisely this eventuality. As previously reported, in May, non-residents began to get rid of Government Bonds.

According to NBU, in just a month portfolio of government bonds owned by foreign investors fell by 14% – up to 4 billion UAH. At the same time the euro, in the opinion of most analysts, will continue to gradually decline.

Already, some bankers predict the end of the year the ratio of the euro against the dollar at the level 1,15 USD / EUR, which corresponds to the hryvnia – the euro at the level of 9,1-9,2 UAH / EUR. In this regard, bankers pessimistic about the outlook for earnings on operations with currency. “The deficit of the Pension Fund may cause that the decision to abolish the retirement fee when buying and selling currencies will be reviewed. It seems to me that the outcome of the first half against currency earnings of banks will be very modest compared to the same period last year”, – predicts Vyacheslav Molodkin.

Ukrainian Globalist
2010-06-16 01:28, Currency news.

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