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01.06.2010
Credit-Rating Casts Up April’s Economy Trends
Credit-Rating has today released a monthly survey of Ukraine’s economy development in April 2010. The survey features evaluation of real and financial sectors of economy, of balance of payments, of currency and stock markets, state budget sector and government’s debt-related policy.
The agency notes certain decline in industrial production (98.2% versus the previous month), which was prompted by deceleration in growth rates by a number of key lines. In Credit-Rating’s view, under retaining current trends due to volatile environment in the external markets, we may expect certain decline in production by a number of metallurgical companies. Business activities of construction companies are not to exceed substantially the level of the previous year and will be constrained by modest rise of effective demand. A positive factor for retailers may be a trend of cheapening loans in the banking sector. This will allow a number of borrowers to repeatedly restructure their existing debts by more acceptable terms, which is rather urgent under zero growth of sales.
A temporary improvement of external environment, and, consequently, growth in export sales, rising volume of foreign lending resources resulted in positive balance of payments of USD1.3bn. Net inflow of foreign direct investments remained rather low, which indicates cautious investors’ attitude to investing in business in Ukraine, and their tending to invest in more liquid instruments – state bonds or bonds of Ukrainian issuers. The ratio of foreign direct investments is also prompted by waiting attitude with regard to further investing in development of subsidiary banks in Ukraine.
The banking system retained trend of increasing cash offer, and the National Bank of Ukraine continued to withdraw excessive funds in order to mitigate monetary risks. The rising liquidity of banks was prompted by growth in resource base raised from both legal entities and individuals under low lending activities. Credit-Rating notes gradual decrease in income-generating capacity of deposits, as the banks do not implement active lending policy, and, consequently, the inflow of deposits affects incomes of banking institutions. In case the existing trends in lending and the regulator’s policy retain, the agency may predict further decline in interest rates of deposits denominated in both national and foreign currencies. Credit-Rating also notes continuing growth of overdue loans, and, consequently, rising provisions for lending transactions. In Credit-Rating’s opinion the growth in this indebtedness is driven by more adequate reflecting of quality of loan portfolios rather than by deteriorated population’s solvency.
Credit-Rating should also note a persisting decreasing trend of population’s demand for foreign cash. We may expect that the growth of cash aggregate outside the banking system will gradually decrease following the rising population’s confidence in the national currency.
Survey of Development of Ukraine’s Economy in April 2010 (rus)
Credit-Rating agency has operated in the Ukrainian market since 2001 being committed
to assignment of the national scale ratings. The agency has assigned 1083 ratings,
specifically to 844 Ukrainian companies, 177 financial institutions and 62 municipalities
and their debts, 1 corporate governance rating, 84 bank deposit ratings and 2 insurer
strength ratings. As of June 1, 2010 Credit-Rating maintains monitoring of 635 ratings,
in fact 492 of corporate, 96 of financial and
47 of municipal sectors and 57 bank deposit ratings and 2 insurer strength ratings.
Information on all credit ratings assigned in accordance with the National Rating Scale may be found in REUTERS and BLOOMBERG information systems.
For more information, please contact:
Information and analytic
department
Sergey Rozumyak +38044490 25 50
SRozumyak@credit-rating.com.ua
Denis
Rudenko
DRudenko@credit-rating.ua
