Hryvnia deposits at Ukrainian banks returned to growth in September, inching up by 1.5% m-o-m to UAH 1,439bn (+36% y-o-y) after remaining flat in August. F/X deposits continued to trend lower, down 1.7% m-o-m to $18.5bn (+15% y-o-y) on top of -0.3% m-o-m in August. Gross UAH loans rose by 1.3% m-o-m to UAH 712bn (still -4.9% y-o-y), the fourth consecutive month of growth, accelerating from 1.2% m-o-m in August and 0.5% in July. Gross F/X loans dipped by 1.4% m-o-m to $6.7bn (-17% y-o-y). Net UAH loans (gross loans less provisions) increased by 1.9% m-o-m in August (latest available data), to UAH 449bn (-14% y-o-y), on top of 0.9% growth in July. Net F/X loans inched up by 0.3% m-o-m (-17% y-o-y).

WSE-listed Astarta Holding, Ukraine’s largest sugar producer, published its 3Q23 operating update, reporting quarterly sugar sales of 83 kt, up 21% q-o-q and 23% y-o-y, and an average sale price of $730/t, down 5.2% q-o-q but up 11% y-o-y. Grain and oilseed sales fell by 25% q-o-q and 35% y-o-y to 70 kt, including 33 kt of corn. Corn selling prices averaged $133/t, down 29% q-o-q and 46% y-o-y. Soybean oil sales stood at 9 kt in 3Q23 (-23% q-o-q and -47% y‑o-y), while soybean meal sales totaled 30 kt (-50% q-o-q and -5.3% y-o-y). The average selling price of soybean oil fell by 8.2% q-o-q and 39% y-o-y to $830/t and that of meal declined by 4.0% q-o-q to $525/t (+16% y-o-y). Lastly, 3Q23 raw milk sales stood at 26 kt (-9.5% q-o-q but +7.4% y-o-y), averaging $351/t in price (-1.9% q-o-q and flat y-o-y).

A total of 38 ships with a combined deadweight of 1.6 Mt have called at Ukrainian Black Sea ports since the Ukrainian military introduced temporary routes for commercial navigation in August, including 33 ships with a combined deadweight of 1.4 Mt thus far in October.

Iron ore exports from Ukraine slipped by 6.0% m-o-m to 1.4 Mt in September, bringing the 9M23 volume to 12.6 Mt (-41% y-o-y). In value terms, iron ore exports dropped by 1.5% m-o-m to $142m in September and 50% y-o-y to $1.3bn in 9M23.

The Verkhovna Rada approved yesterday, at final reading, a bill intended to enhance financial monitoring procedures for politically exposed persons (PEP). The bill reinstated lifetime status for PEPs, removing an earlier provision that limited it to three years. The legislation was part of Ukraine’s conditionality, related to fight against money laundering, under both its current program with the IMF and negotiations with the EU to qualify for accession talks with the bloc.

The state power transmission system operator Ukrenergo published its 1H23 financial results, reporting revenue of $1.0bn (-16% h-o-h, -21% y-o-y), EBITDA of $92m (vs. -$158m in 2H22 and -41% y-o-y), and a net loss of $65m (vs. losses of $24m in 2H22 and $143m in 1H22).

Ukrainian forces used US-supplied ATACMS missiles to hit two Russian airbases in eastern and southern Ukraine, some 100 km from the front lines, on Tuesday. The Ukrainian military said the attack destroyed nine helicopters along with an air defense missile launcher, an ammunition dump, and various equipment. The strike reportedly marked the largest one-time loss of aircraft for the Russian air force. President Volodymyr Zelensky, in his nightly video address, said “our agreements with President Biden are being implemented … very accurately – ATACMS have proven themselves.”

The State Custom Service reported a merchandise trade deficit of $2.7bn for September, flat m-o-m, with exports unchanged m-o-m at $2.7bn (-35% y-o-y) and imports down 1.1% m-o-m to $5.4bn (+16% y-o-y). In 9M23, the merchandise trade gap swelled to $19.4bn from $6.1bn in 9M22 as exports shrank by 18% y-o-y to $27bn and imports rose by 19% y-o-y to $46bn.

According to the latest monthly survey by the Ukrainian Institute for Economic Research (IER), the share of manufacturing enterprises operating with capacity utilization of at least 75% dipped by 1pp m-o-m to 56% in September after shrinking by 2pp in August, while the share of idle enterprises remained unchanged m-o-m at 4%. In line with earlier surveys, input cost growth was cited as the main obstacle to business activity, but the share of companies mentioning it fell sharply, to 46% from 57% in August. Meanwhile, security concerns emerged as the second largest risk, mentioned by 40% of firms, up from 33% in August, with logistical constraints (cited by 37% of respondents, down from 41% in August) becoming third. Other major obstacles included demand weakness, power outages, labor shortages, and supply chain disruptions.

Ukrainian Railways (RAILUA) CEO Yevhen Liashchenko said in a media interview that the company’s net income stood at UAH 4.8bn ($130m) in 1H23, rebounding from a net loss of UAH 1.0bn in 1H22, and was expected to remain positive for the full year, up from a provisional net loss of UAH 10.8bn in 2022. Cost-cutting measures have helped RAILUA save UAH 2.6bn thus far in 2023, including UAH 1.6bn thanks to direct procurement of diesel, gas and electricity as the company currently procures 70% of its consumables via direct contracts with producers.

DTEK Renewables reported 1H23 revenue of $49m (+23% h-o-h, -25% y-o-y), EBITDA of $47m (+112% h-o-h, -23% y-o-y), and net income of $4.9m (vs. $139m income in 2H22 and $629m loss in 1H22). The company booked an EBITDA margin of 85% (net of effect of financial component), down 0.3pp h-o-h and up 4.4pp y-o-y. Net operating cash flow fell by 36% h-o-h and 79% y-o-y to $21m, net investment cash inflow stood at $39m (vs. inflow of $86m in 2H22 and outflow $91m in 1H22), and net financing cash outflow was down 33% h-o-h and up 161% y-o-y at $28m. End-1H23 cash totaled $128m, up 36% compared to end-2022 and up 362% y-o-y, with 45% of the total held in Ukraine and 55% abroad. Total debt shrank by 6% h-o-h and 14% y-o-y to $555m, with net debt down 14% h-o-h and 31% y-o-y to $427m, implying a Debt/EBITDA of 5.9x (vs.13.4x in 2H22 and 5.3x in 1H22) and Net Debt/EBITDA of 4.6x (vs. 11.2x in 2H22 and 5.1x in 1H22). DTEK Renewables confirmed that it remained in breach of covenants attached to its bank and non-bank borrowings of EUR 215m, with this debt becoming due on demand and reclassified as current liabilities. The company remains in talks with banks to find a solution to the debt related to its wind power plants located in the Russian-occupied territory.

Russian forces intensified their assaults on the eastern front last week, launching simultaneous attacks in multiple points along the Kharkiv-Luhansk region front line and around the Donetsk city suburb of Avdiyivka. Russian forces achieved minor gains of several hundred meters to 1-2 kilometers in several locations, but at the cost of heavy losses and — as also admitted by Russian military bloggers — with no operational significance as yet. The Ukrainian General Staff reported over 140 Russian tanks and almost 260 armored vehicles destroyed last week — loss levels comparable with those suffered by the Russian army in the first weeks of its invasion of Ukraine in February 2022. Russian personnel losses claimed by the Ukrainian military rose to 6,000 for the week, the highest figure since Russia’s “human wave” attacks on Bakhmut in March. Independent OSINT sources monitoring visually confirmed battlefield losses in Ukraine have also reported a surge in numbers of destroyed Russian equipment.

State rail monopoly Ukrainian Railways (RAILUA) reported freight transportation of 12.0 Mt in September, down 1.9% m-o-m but up 3.0% y-o-y.

Crude steel production in Ukraine totaled 4.4 Mt in 9M23, down 20% y-o-y, with finished and semi-finished steel output and hot metal production falling 17% y-o-y to 3.9 Mt and 4.6 Mt, respectively.

The IMF estimates Ukraine’s 2024 external funding needs at $32bn, or $3.0bn higher than during its first review of the $15.6bn 4-year EFF program for Ukraine in June, IMF Managing Director Kristalina Georgieva said yesterday, addressing the fourth Ministerial Roundtable Discussion for Support to Ukraine. Georgieva praised Ukraine’s progress under the EFF and commitment to proceed with reforms in challenging times. She also confirmed that the third EFF tranche of $0.9bn could be disbursed in December.

Ukraine has received a $1.15bn budget support grant from the US, the eighth and final disbursement from a $9.9bn aid package approved last December. As before, the funds were channeled via the World Bank PEACE project and will be used to reimburse the state budget’s non-military expenses including wages paid to public sector and emergency service employees as well as social payments.