Dear participants of the “OTP Pension” and “FreeFlight” pension funds,
We invite you to review the performance results of OTP Capital’s non-state pension funds for January 2025.
GENERAL ECONOMIC SITUATION IN UKRAINE
In January 2025, the economic situation in Ukraine remained tense due to high inflation rates, which reached 12% year-over-year. In response, the NBU’s monetary committee raised the key interest rate by 1 percentage point to 14.5%. The main inflationary pressures were both short-term—stemming from poor harvests and the devaluation of the hryvnia—and long-term, including labor shortages and increased production costs due to the ongoing war.
Demand for foreign currency remained high during the first half of January, leading to a devaluation of the hryvnia to 42.43 UAH/USD. However, interventions by the NBU and a decline in demand contributed to a strengthening of the hryvnia towards the end of the month. The official exchange rate weakened by 1.5%, from 44.43 UAH/USD to 41.74 UAH/USD, while the cash rate decreased by 2.2%, from 43.011 UAH/USD to 42.06 UAH/USD. The hryvnia’s strengthening in the second half of January had a negative impact on the returns of hryvnia-denominated funds. A moderate and controlled devaluation to levels of 43-44 UAH/USD is expected by the end of the first quarter of 2025.
Despite the rise in the key interest rate, the Ministry of Finance increased the yields on domestic government bonds (OVDP) in the primary market by only 50 basis points.
HRYVNIA DENOMINATED INVESTMENTS
Despite the rise in the key interest rate, the Ministry of Finance increased the yields on OVDP in the primary market by only 50 basis points. As of January 2025, the yields were as follows:
- 6% – OVDP with a maturity of up to 1.5 years
- 6% – OVDP with a maturity of up to 2.5 years
- 3%-14.0% – “reserve” OVDP with a maturity of up to 3.5 years
Interest rates for term deposits in hryvnia increased only in some banks (+50 b.p.), remaining within the range of 8-13%.
The strengthening of the hryvnia in the second half of January had a negative effect on the returns of hryvnia-denominated funds.
FOREIGN CURRENCY INVESTMENTS
Yields on foreign currency OVDP remain stable:
In the primary market:
- 6%-4.7% in USD
- 2% in EUR
In the secondary market:
- Up to 4.2% in USD
- Up to 3.0% in EUR
The market for foreign currency-denominated government bonds (OZDP) experienced significant volatility at the beginning of the year, but following the inauguration of Donald Trump and his calls for an end to hostilities by the Russian Federation, bond prices rose by 0.5%-4%, depending on the maturity period, which positively affected the returns of foreign currency funds.
NON-STATE PENSION FUND RESULTS
OTP PENSION
Fund Portfolio
The fund sold OVDPs worth UAH 143.5 million and purchased new ones worth UAH 150 million with a shorter maturity period. Deposits are placed in the following banks:
- UAH 2.6 million – JSC “Ukreximbank”
- UAH 7 million – JSC “PUMB”
- UAH 1.3 million – JSC “State Savings Bank of Ukraine”
Financial Results
- Total NAV as of the end of January 2025: UAH 650.1 million
- Fund assets grew by ↑UAH 14.7 million (2.3%)
- UAH 6.3 million in contributions were made
- UAH 1.1 million in pensions were paid
Performance
In January, OTP Pension earned:
- Monthly return: 1.5%
- Annual return (over the last 365 days): 18.8%
FREEFLIGHT
Fund Portfolio
In January, the fund actively rebalanced its portfolio, utilizing arbitrage on the secondary market of short-term dollar-denominated OVDPs. Part of the funds was placed in deposits:
- UAH 0.7 million – JSC “Ukrgazbank”
- USD 31.7 thousand – JSC “Ukreximbank”
- USD 6.4 thousand – JSC “TASCOMBANK”
Financial Results
- Total NAV at the end of the month: UAH 63.2 million
- Fund assets grew by more than ↑UAH 1.1 million (1.7%)
- More than UAH 1.1 million in contributions were made
- UAH 36.7 thousand in pensions were paid
Performance
The growth in the value of OZDPs and the active rebalancing of the portfolio helped the fund earn:
- Monthly return: 0.5% in USD
- Annual return (over the last 365 days): 6.0% in USD
As the fund is tied to foreign currency assets, in January, due to the depreciation of the hryvnia and strengthening of the dollar, its return in national currency temporarily decreased to -0.01% for the month.
