EAVEX Weekly

May 15, 2017

Kyiv-listed Ukrainian equities were soft amid a second consecutive week of very limited holiday trading, as Ukraine has now established an additional day off to the previously-existing May 9 Victory Day holiday, in order to observe the European date of the end of World War 2. On the other hand, there were also some actual negative drivers for local stocks. In particular, the National Bank re-calibrated the level of nonperforming loans (NPL) in the country’s banking system under a new methodology, saying that NPLs accounted for 55% of total loans as of the end of 1Q17. Loans are now considered as NPLs if the debtor has not made his scheduled payments for at least 90 days. The NBU’s previous estimate for the NPL level was substantially lower at 38%. The main takeaway from the report is that Ukrainian banks are in no condition to restore normal business loans any time soon, implying that the domestic economy will continue to experience a lack of available capital for investment.