Audit reports confirm credibility of information recorded by banks on financial standing, financial result and cash flow for the reporting year in line with the International Financial Reporting Standards. This was the main conclusion drawn from audit reports’ findings of financial statements as of 31 December 2018 submitted by all banks to the National Bank of Ukraine (NBU).
At the same time, some of 25 largest banks according to the assets share in the banking sector received a qualified opinion and a restatement. Restatement of PrivatBank was noted for the highest materiality.
Thus, in 2018 PrivatBank received additional information on assets value that was recognized by the bank before the nationalization for loan repayments issued to related companies with the previous shareholders of the bank. On the account of additional information on assets, the bank renewed the mentioned loans, raised allowance for such loans and reduced the carrying value of pledge on these loans by UAH 5.6 billion. Thus, total losses of the bank that equal the raised loss allowances on loans the previous holders issued to related companies increased to UAH 209.4 billion.
The bank’s auditor has confirmed the bank’s statements for 2018, in particular expenses on allowances.
At the same time, losses incurred by the bank due to allowances do not effect its day-to-day operation, since the bank has a sufficient capital cushion and complies with the statutory requirements of the NBU; the PrivatBank auditor also confirmed this fact.
“The NBU began processing the submitted statements and can already draw some conclusions. First, the NBU is pleased with the quality of banks’ statements. Second, the extent of losses detected after adjusting PrivatBank data confirmed by the auditor has once again proven the gravity of the problem caused by lending to companies related to previous owners,” noted Vitalii Vavryshchuk, Director of Financial Stability Department.
Latter on, the NBU will examine submitted statements and provide banks with comments for restatement as necessary.