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The Banking Market in Ukraine 2007 - CEE banking briefPublished by: Intelace Research Published: Oct. 1, 2007 - 50 Pages Table of Contents
AbstractFavorable macroeconomic situation.The Ukrainian economy has already fully recovered from the slowdown of 2005 caused by rising prices of imported raw materials. During 2006-H12007 the average GDP growth rate exceeded 7.5%. The wealth of individuals is increasing rapidly as a result of low unemployment and accelerating wages (wages doubled within last 3 years to EUR204 per month in H1 2007). The local currency - hryvna is relatively stable, being pegged to US$, currently slightly depreciating against Euro inline with the weak US dollar. Worsening C/A balance and accelerating inflation are the major threats, possibly hampering quick expansion of the economy in the mid-term Banking market surging. During 2001-H1 2007 banking assets have increased at a very high rate (almost 50% p.a. in nominal terms). Retail business is growing most rapidly, with household loans and deposits increasing nearly at double rate of respective corporate volumes. Interest margins have recently stabilized and thanks to the significant assets and liabilities growth, the overall revenues and profits of banks surge High banking market fragmentation. Ukrainian banking sector is extremely fragmented. With over 170 banks present in the country and very low concentration ratios (HHI* Index =361) the market is awaiting a next phase of consolidation. Expected falling margins, increasing competition and changing regulatory environment are likely to spark a next wave of M&A activity Entry of foreign players. Only during 2005/H1 2007 there have been at least 14 significant transactions closed on the Ukrainian banking market, initiated mainly by large international players willing to gain a foothold on a rapidly growing market. The current market attractiveness is reflected by extremely high valuation multiples reaching: 5-6 times Equity Value or 50%-60% Asset Value Future prospects are good. In our base scenario we assume that the Ukrainian economy will sustain quick growth, which will convert into a very positive climate for the banking market. We expect that banking assets will rise to UAH 923 billion through 2009. In the mid term perspective retail banking is likely to be the key driver with mortgage and consumer lending leading the growth. Of course growing risks, especially the C/A imbalance and accelerating inflation cannot be neglected, as they might ultimately affect the quick market growth. Get Full Details About This Report >> |
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