УДК 336
Landina Tetiana Volodymyrivna
Khmelnytskyi cooperative trade-economic institute
Khmelnytskyi city
EVALUATION OF THE BANKING INVESTMENT ATTRACTIVENESS
Analysis of the main problems of development banks and othe systematization of proposals to improve their efficiency of investment attractiveness.
Keywords: bank, investment analysis, investment attractiveness.
The main lever of economic growth forecast of macroeconomic development in 2014, 2015. (1) will be the expansion of investment demand, on average, by 7.7%. Inflow of direct investments in the medium term is estimated at 8.2 billion U.S. dollars, their ultimate scope of applications - replacement of fixed assets, modernization of production, increase scientific and technological capabilities and competitiveness. In this context, improving the investment attractiveness of the banking system is fundamental to economic growth, as much of the financing of enterprises and organizations are in the form of a loan with the participation of banks.
2011 was the last successful for the Ukrainian economy. According to its results, real GDP growth was 5.2% Private consumption was the main driver of economic growth. Very important support in the first half year gave export ? but in the second half it was agriculture, in particular, a record harvest of grain (more than 55 million tons), and some sugar beet. This led to the consumer index prices falling (December to December) to 4.6% - the lowest rate for the last 9 years.
In 2012 year according to the forecast (1) will be the falling of the economic growth to 3.2%. The are some external risks:
- IMF won’t gives some financing;
- growing crisis in the Eurozone;
-deficit of the internal financing and reduction of the international market capital entering.
In the period of rapid economic growth almost all banks gives priority targets for market share growth (loans, deposits), depending on a particular specialization in the service of individuals and / or entities. Specific goals for performance are planned, but they were not the highest priority. Targets to achieve market share prevailed.
Currently transition from the bank to achieve goals market share to increase its efficiency is vital.
The problem is put it in a plane, because as a result of the crisis, many banks system for a substantial share of the market for loans and deposits are in quite a difficult situation, require significant capital increase and are not attractive to investors.
It is worth noting that in the past most notably in unattractive from the perspective of investors was Bank Ukraine, in spite of which he occupied the market share, with an extensive branch network, but a significant share of problem assets. Crisis of 2008 to 2011. caused great damage to the banking system: dramatically reduced quality of loan portfolios, there was a significant outflow of deposits, decreased liquidity, increased costs and decreased income of banks.
Currently, banks have managed to offset the outflow of deposits, everywhere are working to reduce administrative costs by optimizing the organizational and functional structure of the branch network, the introduction of new information technologies to reduce the complexity and increase the speed of the banking operations. However, the quality of loan portfolios is still low.
So based on the management accounts of banks accounting Fitch level of NPLs (loans overdue by 90 days) decreased slightly to 18% at end-2011, compared with 21% at the end of 2010, while the potential problem and restructured loans were 46% at end-2011 (end of 2010 - 57%) (2).
It should be noted that Fitch rating of 14 banks in Ukraine, which assets are about 48% of total assets in the banking sector.
According to the agency, the key factors that will determine the trends in asset quality of banks in the short term will be the economic growth rate and the exchange rate of the grivnas. With regard to the capitalization of banks, Fitch notes that the contributions to the capital of the banks in the amount of 135 billion USD. for the period from the fourth quarter of 2008 to the end of the first quarter of 2012 (2), almost half admitted to the state-owned banks to support new lending and restructuring of nationalized banks.
High proportion of non-performing assets to require capitalization of banks, since such assets must be reserved, and the necessary amount of redundancy may be substantially higher annual operating profit, even if it is available. A number of banks, including foreign investment, during 2009 to 2011. devote significant resources to the reservation problem assets, which led to the loss-making activities, hence a reduction of capital, which had to be filled.
During 2009 to 2011. total financial result of the banking system was negative.
Tools for improving the quality of loan portfolios and reduce bad assets are arrears administration pursued debt collection departments of banks, debt restructuring with a view to removing credits for normal service. He and other tools is labor intensive and costly, with some credit debt as during the collection of activities and the restructuring is not compensated. Since the additional costs associated with financing collectors units, with work on restructuring are often high, a number of banks have started practiced sales troubled loan portfolios to third-party collection companies. However, the selling price of distressed loan portfolios, especially not secured by collateral, is quite low, so the banks have to choose on what portfolios and how to work and what portfolios by the conditions under which it is advisable to sell.
An alternative tool to improve the quality of loan portfolios is the issuance of new high quality loans, which, again, requires increasing the capital of banks, the interest of investors to invest in their development.
This raises the question of economic feasibility of investments, the issue price of the bank, which depends not only on its asset quality, the ability to make a profit on their own and borrowed resources, the effectiveness of the financial and economic activities, but also a number of other factors.
Extensive experience in the financial system allows the author to identify the main data rating in from the investors in sequence, beginning with the highest weight. They are:
1. Transparency of the bank, its balance and transactions, including the correct management accounting that meets international standards. Without this component can not be a fair assessment of the bank, any decisions of investment resources.
2. Existence and magnitude of the bank's capital as the difference between the real value of the assets (including the fair reserves) and bank's obligations to third parties creditors. Bank capital based on the findings of recognized audit firms responsible for the results of the audit and the auditor's own reputation.
Capital recognized auditors, is, as a rule, the lower limit value of the Bank.
As noted above, the main factors affecting the bank's capital, is the quality of its assets and the financial results of the current activity. With particular attention paid to the quality of assets of insiders and shareholders, the financial condition of borrowers, the level of service to credit and liquidity of collateral.
3. Return on equity, assets, and the mass of profit over the years.
Rates of return of capital and assets (ROE and ROA) characterize the performance of the bank, the mass of profit is the basis for calculating the payback period and, accordingly, the estimated cost of the Bank.
4. Developing the marketing network and customer base.
These parameters to evaluate the potential of the bank, and its share in the market place from the standpoint of economic development of the country, as well as an alternative solution for the efforts required for entry into new markets.
5. The presence of strategic business plans and budgets of the bank.
Strategic business plans and budgets of the bank are not only essential tools of financial management organization, but their presence and investor analysis provides insights about all aspects of the bank's activities, the ways of its development, the competitive environment, the chosen strategies and methods to achieve the objectives, resource requirements, and so on, and to draw conclusions about the reality of the goals and objectives, objective assessment of the competitive environment, the external risks and opportunities.
6. The level of bank management, professional and qualified staff.
Estimated, as a rule, for results of the bank, as well as in the discussion of business plans and budgets of the bank, its reports on different areas of work.
7. Risk management, the quality of internal audit.
The selection of these parameters of evaluation of investment attractiveness is due to their significant role in getting the results of some of the bank made and the potential quality of loan portfolios and other assets, the level and methods of control of various aspects of the activities of the bank. Analysis of the forms and methods of risk management, facilities and internal audit procedures can be judged largely on the internal causes of the problem assets, the ability to control the level of acceptable risk.
8. The development of information technology.
This parameter estimates, especially in systemic banks with developed trade network is becoming increasingly important, as it provides consistency and speed of transactions, reducing their complexity, with proper formulation helps minimize operational risks.
Thus, the main objectives to increase the investment attractiveness of the bank are:
1. Providing the highest quality assets
2. Improvements in efficiency, optimization of operating costs
3. Development of a Strategic Business Plan Bank
4. Increasing the quality of risk management and internal audit
5. Implementation of information technology, including reporting andmanagement accounting.
CONCLUSIONS:In the highly competitive market for the available funds banks where there are investors who evaluate them not by the market share, but for the efficiency, asset quality, profitability, management level, trade development and information technology.
The used literature list:
1. Міністерство економічного розвитку і торгівлі України. Україна: перспективи розвитку. Консенсус-прогноз. Випуск 29, 2012рік.
2. Fitch прогнозирует еще большее замедление роста ВВП Украины в 2012году . – Интерфакс, 11.05.2012;
3. Fitch:украинские банки – некоторые преграды на длительномпути к восстановлению. – FitchRatings. 12.05.2012.