Managing of the formation and using of profits at CB PJSC "Privatbank"
Students Name: Fil Oleh Romanovych
Qualification Level: magister
Speciality: Finance, Banking and Insurance
Institute: Institute of Economics and Management
Mode of Study: full
Academic Year: 2020-2021 н.р.
Language of Defence: ukrainian
Abstract: The purpose of any commercial bank is to make a profit. In the first section the approaches of management of formation and use of profit of commercial bank are considered, the analysis of a financial condition of CB PJSC "Privatbank", profit and profitability of CB PJSC "Privatbank" is carried out. Commercial banks are multifunctional financial institutions that provide a wide range of banking services aimed primarily at obtaining a positive value of the financial result, and its sufficient volume ensures their stable and efficient operation. According to PAS 1 "General requirements for financial reporting", the financial result of the activity is a profit or loss. Profit - the amount by which income exceeds the associated costs; loss - the excess of the amount of costs over the amount of income for which these costs were incurred [5]. The Encyclopedia states: "the bank’s profit is the excess of the bank’s income over expenses (the difference between them) before the payment of income tax" [14]. The worst results of CB PJSC "Privatbank" were in 2016. It was on December 18, 2016, due to solvency problems, the nationalization of PrivatBank was carried out. Since then, the institution is 100% state-owned. During 2017, 2018 and 2019, the financial situation of the bank improved. Regarding equity, profitability indicators and balance sheet currency, their dynamics fully reflects these dynamics - in 2016 the indicators have the worst (lowest) values, and the best - in 2019 CB PJSC "Privatbank" in 2016-2019 performed all mandatory NBU standards. According to the reporting, the bank’s profit is formed from interest, commissions, currency and other income of the bank. Interest and commission income have been growing over the last four years. CB PJSC "Privatbank" has always been actively working with foreign currency and financial instruments, so the bank’s profit from foreign currency transactions has been growing for four years, which is good, and from the revaluation of currency in 2016 and 2017, the bank suffered losses. Not everything is fine with investment activity. The Bank incurred a loss from the sale of investment securities at fair value in 2018 and 2019. 8 The profitability indicators (which characterize the bank’s profitability) of the bank have identical dynamics with the bank’s net profit. Spread and interest margin have the best value in 2019. In the second section, a SWOT-analysis of CB PJSC "Privatbank", economic and mathematical modeling of the net interest margin of Privatbank and forecasting the amount of commission income of the bank by the method of least squares. The SWOT analysis made it possible to develop general recommendations for the bank’s marketing, personnel and finances. The biggest threat to the bank is the mismatch between short-term financial assets and financial liabilities of the bank. Economic and mathematical modeling of the net interest margin of CB PJSC "Privatbank" showed that the bank needs to work with interest income as the main factor of the net interest margin. Forecasting the amount of commission income made it possible to find that in 2020 commission income will increase by UAH 664.1 million. every six months and at the end of 2020 will reach UAH 30,217.2 million. against UAH 24,575 million in 2019. The third section provides recommendations for the formation of profits of CB PJSC "Privatbank" through the introduction of cash back; on the formation of profits of CB PJSC "Privatbank" by reducing the number of branches; on the use of net profit of CB PJSC "Privatbank". It is advisable to reinvest it in full. The effect of the implementation of these recommendations is also calculated. Recommendations for the formation of profits of CB PJSC "Privatbank" through the introduction of cash back consist of pessimistic and optimistic scenarios. The pessimistic scenario assumes that the population will use an additional UAH 20 billion in one year. in order to return funds through cash back; optimistic - UAH 200 billion. Under the pessimistic scenario, net profit will increase by UAH 192.7 million, and under the optimistic scenario - by UAH 1,927 million. Thus, in the modern banking sector, remote service is about 70%. Today, innovative banking involves a combination of various promising technologies, in particular: self-service terminals; telephone, mobile, SMS and Internet banking; use of 9 bots in different messengers; implementation of contactless calculations both with the help of cards and devices that support NFC technologies [23]. The second recommendation is the formation of the profit of CB PJSC "Privatbank" by reducing the number of branches. Under these conditions, net profit will increase by UAH 1,220.898 million. The third recommendation concerns the use of net profit of CB PJSC "Privatbank". It is advisable to reinvest it in full, as the net mismatch of short-term financial assets and liabilities is UAH 144,397 billion. In general, as a result of the implementation of the recommendations, the financial condition of CB PJSC "Privatbank" will improve.