OREANDA-NEWS. Growth of the Ukrainian banking industry decelerated in October, with a total assets growth of 2.2% m/m, down from 6.6% m/m in September. Overall, the total assets of the banking industry grew by 52.7% over 10M2007 (39.3% over 10M2006) to USD 102.8bn, while the total credit portfolio rose by 56.1% (52.1% over 10M2006). Specifically, corporate loans increased by 48.3% (37.4% over 10M2006), while retail loans grew by 74.3% (twice over 9M2006). The total net income of Ukrainian banks increased by 51.4% y/y over 10M2007 (2.1 times over 10M2006) and amounted to USD 1.1bn, yielding an average annualized ROE of 12.8% (13.4% in 2006).

Millennium Capital investment company's analysts see the deceleration of growth in assets as a time-lagged response to the world liquidity crisis, with Ukrainian banks now facing the problem of raising cheaper resources from foreign banks. The growth is unlikely to accelerate in subsequent months of 2007, since the National Bank of Ukraine increased overnight interest rates by 300 basic points on November 9, introduced obligatory provisioning (reserves) for funds raised by the banks from non-residents starting from November 20, 2007, and is pursuing a conservative monetary policy to fight inflation. However, note that the 10M2007 assets growth is higher than that of 10M2006, and the overall growth for 2007 is likely to be similar to that of 2006 (59.2%).