FUIB reports positive 2Q12 financials

Обзор облигаций 23.07.2012 FUIB reports positive 2Q12 financials First Ukrainian International Bank (PUMBUZ) posted strong growth in key revenues in 2Q12: net income added 9% yoy, and net fees and commissions increased 15% yoy. However, the bank's total revenues were slightly down yoy due to losses related to the revaluation of securities and foreign currencies. Growth in FUIB’s operating expenses slowed to 15% yoy in 2Q12 from 95% yoy in 1Q12. The spike in costs is likely related to business restructuring following merger with Dongorbank in mid-2011. Provisions declined 23% yoy in 2Q12 as the bank brought its LLR to 17.8%, which implies an NPL coverage ratio of 97%. The lender’s assets declined 1% qoq but net loan book was up 3% qoq. Government T-bills accounted for 8.5% of total assets. FUIB's 2Q12 and 1H12 results, USD mln ---------------------------------------------------------------- 1H12 yoy 2Q12 qoq yoy ---------------------------------------------------------------- Net interest income 97 13% 50 6% 9% Net fees and commissions 21 14% 11 13% 15% Revenues 120 8% 58 -6% -3% Operating expenses -73 51% -29 -32% 15% Pre-impairment profit 47 -25% 29 57% -16% Impairment charge for credit losses -26 -42% -14 21% -23% Net income 16 24% 11 130% -4% ---------------------------------------------------------------- 1H12 qoq ---------------------------------------------------------------- Assets 3,936 -1% Gross corporate loans 1,849 2% Gross retail loans 609 -10% Loan loss reserve -436 -17% Liabilities 3,424 -1% Corporate deposits 890 1% Retail deposits 1,193 5% Equity 512 0% ---------------------------------------------------------------- Source: Company data Olena Zuikova: We assess FUIB’s 2Q12 results as broadly positive – the bank clearly demonstrated its ability to contain merger-related growth in operating expenses. With NPLs provisioned almost in full, the bank should continue cutting its loan impairment charges further. FUIB’s liquidity cushion is thick enough (cash equivalents and T-bills combined make up 21% of total assets) and its solvency is strong with end-1H12 NBU CAR totaling 15.5% (vs. the minimum of 10%).