Ukrainian banks suffer $375m loss in May

Ukrainian banks lost 3.03 billion hryvnias (an equivalent to 375 million dollars) in May this year. Growing expenses caused by evaluation of credit operations and the formation of reserves to guarantee them are believed to be the main reasons behind the loss, the National Bank of Ukraine says in its report published on Monday. In January-May, the profit of Ukrainian banks stood at 1.1 billion hryvnias (137.5 million dollars), which is a 42.11 % decrease over the same period in 2012 (1.9 billion hryvnias). The banks’ income grew by 8.4% to reach 64.9 billion hryvnias (8.1 billion dollars), while the expenses also grew by 10.1 % to reach 63.8 billion hryvnias (about 8 billion dollars). According to the National Bank of Ukraine, the surplus of Ukraine’s payment balance stood at 514 million dollars in May which is almost twice as low as in April (927 million dollars) and the current accounts deficit had dwindled to 208 million dollars from 1.2 billion dollars in May 2012. The National Bank of Ukraine notes that a decline of economic activity in Ukraine and decreasing external demand are the main preconditions leading to reduction of imports and exports. The goods exports dropped by 17.8 % in May in the annual measurement to 5.2 billion dollars. \"The unfavorable external situation and completion of deliveries of pipes to the Russian Federation have caused a 25.7 % fall in exports of metallurgical products. Exports of products of agro-industrial complex have also dropped by 34.8% largely due to a high comparative basis (record high exports of grain crops in May 2012). Falling external demands for corn and temporary restrictions on grain exports to the Customs Union imposed by several Ukrainian enterprises have also affected export volumes. A 21.3 % decrease in exports of engineering products is linked to completion of deliveries of railway cars to Russia and lowering investment activities in the economy,” the National Bank of Ukraine says in its report. Imports shrank by 31.2 % in May in the annual measurement to 5.6 billion dollars. The fuel and energy ratio is gradually going down in Ukrainian imports. For example, Ukrainian gas imports dropped 2.6 times in May and by 26.1% over the past five months. The imposition of import duties on light cars and reductions of government capital spending and the internal investment demand in general are the reasons behind a 39.5% decrease in imports of engineering products. A decline in imports of consumer goods was also noticed in May. Food imports went down by 14.7 % for the first time since the start of 2012 while industrial imports fell to 27.9 % from 4.5 % in April.