KYIV

PrivatBank, Ukraine’s largest bank, reported a net profit of 21.2 billion hryvnias ($806 million) in January-September this year, 100 million hryvnias less than in the same period last year.

The bank said that the revival of business activity in Ukraine and prudent risk management policy led to an increase in its loan portfolio by 19 percent, while the volume of clients’ funds placed with the bank remained stable, despite a significant reduction in deposit rates on the market.

PrivatBank, which holds 20 percent of the Ukrainian banking sector, was co-owned by oligarch Ihor Kolomoisky, once a mentor of President Volodymyr Zelensky, who now faces U.S. sanctions for his activities while governor of the Dnipropetrovsk region.

The bank was nationalised in 2016 after investigators alleged Kolomoisky and his partner had funnelled money offshore and defrauded the bank of billions of dollars. The Ukrainian government paid off a $5.6 billion bailout – an amount equal to about 6 percent of Ukraine’s gross domestic product (GDP).

Kolomoisky and his former partner have repeatedly denied any wrongdoing and have been trying to overturn the nationalisation in the courts.

The central bank governor Kyrylo Shevchenko said that about 100 court cases were proceeding around PrivatBank, noting “it is an exceptionally complex matter.” A Kyiv court declared the nationalisation illegal in 2019.

Earlier this year, Ukraine said it would put up PrivatBank for sale in a bid to attract international investment. In August the government approved the bank’s privatisation strategy.

PrivatBank reported a net profit of 2.4 billion hryvnias in the first quarter of 2021 and 25.3 billion hryvnias in 2020.

Earlier this month, Fitch Ratings confirmed the long-term issuer default ratings (IDRs) of PrivatBank at “B” with a positive outlook. The stability rating was confirmed at “B”.

Fitch said that Privat’s VR captured the bank’s leading domestic franchise, strong performance metrics to date and reduced pressures on the bank’s standalone profile from the pandemic.

The VR also continues to reflect the bank’s sensitivity to the cyclical Ukrainian environment and high linkage to the sovereign’s credit profile due to sizeable holdings of state debt.

Assets are dominated by cash, interbank placements and sovereign bonds, while net loans made up a small 17 percent at the end of the first half of 2021. The share of impaired loans amounted to a high 74 percent, largely represented by legacy loans and almost fully covered by total loan loss allowances. Privatbank’s loan book originated post-nationalisation is of decent quality. The impaired loans origination ratio in its credit cards portfolio amounted to a low 1 percent in the first half of 2021.