5th October 2016

PrivatBank releases actual data on its related-party loans

According to International Financial Reporting Standards (IFRS), related-party loans issued by PrivatBank accounted for 17.7 percent of the total loan portfolio at the end of 2015, as confirmed by the audit results held by PwC. In general, recent increase in loans balance resulted from the exchange rate fluctuations and sharp shrink of the bank total portfolio. Historically this ratio hasn’t exceeded 20 percent.

Using the methodology provided by the NBU itself, as of September 28, 2016, the related-party loans of the bank accounted for 4.71 percent of the total loan portfolio.

According to the NBU methodology, PrivatBank has the N9 ratio (ratio of a maximum credit exposure to related parties compared to the bank regulatory capital) of 29.29 percent as of 1.09.2016, being in line with the average figure of 29.06 percent in the banking system https://bank.gov.ua/control/uk/publish/article?art_id=34661442&cat_id=34798593. It’s worth mentioning that approximately half of the loans to related parties are related to PrivatBank directly, and the rest is related to the companies of the shareholders. There are certain differences between the NBU methodology and IFR standards. PrivatBank is continuing to work with the NBU on this issue.

Note:

The NBU introduced changes to the Methodology for calculation of the N9 ratio (ratio of a maximum credit exposure to related parties) having approved the NBU Board Resolution No.361 dated 08.06.2015. Information on calculation of this ratio is not released at the NBU web-site right up to 01.06.2015. Due to the changes in the NBU methodology, from 01.07.2015 the average N9 ratio increased reaching its peak of 63.72 percent on 01.12.2015. Afterwards, in 2016 the ratio has been gradually dropping https://bank.gov.ua/control/uk/publish/article?art_id=34661442&cat_id=34798593.

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