Problem assets decreased by UAH 54 billion

Portfolios of problem loans decreased last year by 6-10%, as calculated by the Credit Rating agency. But such dynamics became possible not thanks to the return of debts, but due to their write-off. Bankers note that the greatest difficulties arise with the repayment of large loans. However, they do not rule out that they will write off a similar amount of bad debts this year.

Last year, banks actively worked to resolve the issue of overdue debts: the portfolio of problem loans of the population decreased from 50% to 40%, of enterprises - from 36% to 30%, the Credit Rating agency calculated based on data from the banks it rated. According to his information, the total amount of problem loans decreased by UAH 54 billion and at the end of 2011 reached UAH 243 billion. The reduction occurred largely not due to work with problem borrowers, but due to debt write-off - from November 2010 to December 2011, banks wrote off about UAH 25 billion. At the same time, Credit Rating notes the overall weak level of sales of problem loan portfolios of banks. Transactions involving the transfer of distressed assets to related companies also became less popular after the National Bank issued an explanation obliging banks to pledge 100% reserves for such operations.

It should be noted that the NBU is more optimistic in its calculations: according to its data, the share of overdue debt in the total loan portfolio over the 11 months of last year decreased from 11.2% to 9.7% (UAH 80.3 billion). Bankers explain this by the fact that the regulator’s statistics do not include restructured and extended loans, which rating agencies consider potentially problematic. At the same time, market participants are in no hurry to voice the difficulties of such work. “Many banks, especially large ones, are in no hurry to put some loans into arrears, which are, in fact, problematic. But from the point of view of international audit, they definitely fall into this category,” says Andrey Onistrat, chairman of the supervisory board of National Credit Bank.

Bankers admit that they are experiencing the greatest difficulties with the largest borrowers. “Often there is a long and not always successful battle in the courts; even the collection of collateral for such loans takes years. Medium-sized loans, which make up a significant part of the portfolios of medium-sized banks, most often turn out to be problematic in such financial institutions,” notes Mr. Onistrat . In general, the biggest challenges arise with the debt of the sectors most affected by the financial crisis. “The specifics of all loans are different. Problems arise with large corporate loans, loans to the population, construction companies, and state-owned enterprises,” states Dmitry Grijuk, Chairman of the Board of Khreshchatyk Bank. The main volumes of problem debt were formed in the pre-crisis period, before October 2008, primarily due to foreign currency and unsecured loans. “Almost all consumer loans issued after the crisis, taking into account the lessons taught to the system, are now serviced without violating payment discipline, largely due to higher requirements for the borrower and enhanced risk assessment. The cooperation of banks with credit history bureaus also played a significant role in this,” — notes Dmitry Zhadanov, director of the department for working with distressed assets of individuals at VAB Bank.

According to Credit Rating forecasts, this year the volume of problem debt may decrease to 25% of the portfolio of legal entities and 35% of the portfolio of individuals, primarily due to their sale to collection companies. “The price of the portfolio being sold should be based not only on average market prices, but also take into account the quality of the specific portfolio and be calculated based on the amount that will most likely be recovered,” notes Dilyara Mustafayeva, director of the agency’s methodology development and advanced research department. According to Andrei Onistrat, the sale of their problem debt by large systemic banks will make it possible to reduce the level of non-repayment by 7-10% by the end of the year. But the dynamics will depend on the economic situation and administrative measures of regulators. “If reforms are carried out and the economy is filled with real money, problem loans will begin to be repaid; if this does not happen, the situation will remain the same,” says Dmitry Grijuk.

Elena Gubar

Newspaper "Kommersant Ukraine" No. 7 dated January 24, 2012, p. 6

Authors:

Elena Gubar

Banks managed to write off