The Ukrainian government has earmarked UAH 1bn ($125m) of additional financing for the city of Kyiv, with half of this amount to be allocated for bank loan redemptions and the other UAH 500m to finance renovation of residential buildings.

State oil and gas monopoly Naftogaz Ukrainy announced it has signed an agreement with Germany’s RWE Supply & Trading that creates the legal framework for the Ukrainian company to begin gas imports from Western Europe.

Metinvest reported its 1Q12 production results with steel output down 2.9% q-o-q and 8.7% y-o-y to 3,296 kt. The sharp decline on a y-o-y basis was attributed mostly to lower steel production at Azovstal [Hold; PT $0.146], which decommissioned its open-hearth furnaces in 2Q11 and thus reduced its total capacity. Metinvest also mentioned weaker demand for steel products in the first quarter.

Privatbank, the largest Ukrainian bank by assets, reported IFRS net profit of UAH 1.5bn ($0.2bn) for 2011 (+4% y-o-y), for a ROE of 9% (vs. 11% in 2010). The bank’s NIM improved to 9.7% from 7.3% in 2010 thanks to a 63% surge in net interest income, with the Cost/Income ratio declining to 47% from 54% in 2010. The  cost of risk rose to 5.7% from 4.3% a year before while the LLR to gross loans ratio inched down to 12.9% (-0.3pp y-o-y). NPLs (loans overdue 90 days) shrank to 4.3% of total loans from 7.3% as of end-2010. Privatbank increased its total assets by 16% y-o-y to UAH 141bn ($17.6bn), with gross loans up by 19% to UAH 123bn ($15.4bn). Cash and cash equivalents were up by 6% y-o-y to UAH 18.6bn ($2.3bn or 13% of total assets). Total capital adequacy stood at 16.1% as of end-2011 (+1.2pp y-o-y).

State oil and gas monopoly Naftogaz Ukrainy has settled its monthly gas bill for April with Russian Gazprom, paying $628m (-34% y-o-y) for 1.5 bcm of gas (-54% y-o-y) imported over the period. In April, the first month of 2Q12, the gas price for Ukraine increased by 2.2% m-o-m and 44% y-o-y, to $425/tcm, following a scheduled quarterly revision.

DTEK, Ukraine’s leading energy group, posted strong 2011 results, reporting 63% y-o-y growth in revenues, to $5.0bn (5% above our estimate), a 68% increase in EBITDA, to $1.3bn (in line with our forecast) and a 23% rise in net income, to $442m (22% below our forecast). The company’s debt portfolio stood at $1.9bn as of end-2011, yet its large cash position of $1.3bn keep its net debt to EBITDA almost unchanged y-o-y at 0.6x.

Alfa Bank Ukraine, the 10^th largest Ukrainian bank by assets, reported a marginal UAS net profit of $2m for 1Q12. Its gross loan book shrank by 2% q-o-q over the period (+2% in 2011), while customer deposits increased by 3% q-o-q (+26% in 2011). The bank reported a slight decline in NPLs (doubtful and bad loans per NBU methodology) of 0.2pp q-o-q, to 13.1% of total loans, and its loan loss reserves decreased by 0.6pp q-o-q to 22.9%. NIM rose to 6.3% (+0.4pp q-o-q), with the Cost/Income ratio surging to 147% from 71% in 4Q11. Cash and reserves with the NBU decreased by 20% q-o-q to $600m (17% of total assets), with the current ratio (NBU methodology) down by 8pp q-o-q to 101%, still significantly above the required minimum of 40%. CAR (per NBU) decreased by 0.6pp q-o-q to 17.6%, remaining well above the 10% threshold.

Finance & Credit Bank, the 14^th largest bank in Ukraine by assets, reported close to zero net profitability in 1Q12 after posting a net loss of $10m in 4Q11. Its NIM improved to 1.6% from a marginal 0.1% in 4Q11 (1.9% in 2011); the Cost/Income ratio decreased to 96% from 153% in 4Q11 (86% in 2011). The ratio of LLR to gross loans was virtually
flat at 8.8% (-0.2pp q-o-q) and the cost of risk stood at a marginal 0.2% (vs. 0.3% in 4Q11 and 1.2% in 2011). NPLs (doubtful and bad loans per NBU) increased by 0.9pp q-o-q to 5.4%. The gross loan book was up by 2% q-o-q (+1% in 2011).

Privatbank, the largest Ukrainian bank by assets, reported UAS net profit of $33m for 1Q12 (-40% q-o-q and y-o-y), implying a ROE of 6% (10% in 2011) and ROA of 0.7% (1.1% in 2011). Gross loans rose by 4% q-o-q over the period, with corporate loans +6% and the retail book unchanged. Customer deposits increased by a strong 9% q-o-q, producing a Net Loans/Deposits ratio of 106% (-4pp q-o-q). NPLs (bad and doubtful loans per NBU methodology) increased by 2.1pp q-o-q to 16.3% of total loans (+2.5pp q-o-q in 4Q11), having grown by 21% q-o-q in absolute terms. Loan loss reserves decreased by 0.7pp q-o-q to 17.3% of total loans, remaining virtually flat in absolute terms. The cost of risk stood at 6.8% (vs. 7.6% in 4Q11). NIM decreased to 5.8% from 8.5% in 4Q11 (6.7% in 2011) and the Cost/Income ratio improved by 1pp q-o-q to 37% (40% in 2011).

Nadra Bank, the 11^th largest Ukrainian bank by assets, reported tiny UAS net profit of $0.1m for 1Q12 following a marginally positive net result in 2011. The bank reported a positive NIM of 2.6% for the quarter (after negative margins in 4Q11 and 2011) and Cost/Income ratio of 84% (down from 195% in 2011). The 1Q12 cost of risk was marginal at 0.7% (following release of provisions in 4Q11), thus increasing LLR to gross loans by 0.4pp q-o-q to 19.9%. Gross loans were almost flat in 1Q12 (+2% in 2011). Customer deposits decreased by 10% q-o-q (+11% in 2011) driven by corporate account outflows (-10% q-o-q in 1Q12 after +103% in 2011); retail deposits increased by 2% q-o-q (-46% in 2011). NPLs (bad and doubtful loans per NBU methodology) shrank by 1.1pp q-o-q to 22.9%.