OREANDA-NEWS. April 21, 2011. Raiffeisen Bank Aval, the second largest non-state bank with 5.8% of total sector assets, intends to resume retail lending starting May-11, the bank’s chairman Volodymyr Lavrenchuk announced on Apr 20.

Millennium Capital consider the news is STRONGLY POSITIVE for Bank Aval. The recovery of retail lending which constitutes 51% of the bank’s portfolio should help to boost the revenue base of the bank after loan book contracted by more than a third over the last two years. Apart from a fundamental impact, the event may improve the mid-term appeal of the stock for investors. In this respect strong 1Q11 net profit figures which are due shortly may also help. There is also a secular aspect of the move which spells rising competition in the Ukrainian banking sector which should prompt other banks (incl. USCB) to think on adequate response. Overall, sector wide upward lending trend develops in line with our expectations.