07 February 2019
In 2018, solvent banks earned UAH 21.7 billion
of net profit*. The banking system was last profitable in 2013, when it posted
a profit of UAH 1.4 billion.
The banking system’s profitability grew markedly
last year due to lower provisioning levels and a rise in interest income and
fee and commission income. In particular, the amount of provisions created by
banks more than halved, reaching UAH 23.7 billion in 2018 versus
UAH 49.2 billion in 2017. At the same time, the banking system’s
net interest income and fee and commission income increased by 38%.
As before, interest incomes came from corporate
lending (46%), investment in securities (27%), and retail lending (26%). The
share of fee and commission income in total earnings rose to 25% owing to the
development of cash and settlement transactions and other loan-related
"Following the loss-making period of
2014–2017, banks recorded a profit of UAH 21.7 billion in 2018, hitting an
all-time high. The record high level of profits was due to a pickup in bank
lending, primarily in retail hryvnia lending, which grew by more than 30% yoy. The increase in the banking sector profit was also
prompted by lower bank interest rates on retail loans throughout most of the
year and a substantial drop in provisioning, which shows that banks performed
an adequate evaluation of their assets and created provisions accordingly in
the previous years. We expect banks to be successful in terms of profitability
in 2019, as lending volumes will continue to grow," said Kateryna Rozhkova, First Deputy
Governor of the NBU.
At the same time, the number and the share of
loss-making banks declined significantly last year. As of 1 January 2019,
performance of 64 banks out of 77 solvent banks was profitable with net profits
reaching UAH 34.4 billion. This offset losses posted by 13 banks, which
amounted to UAH 12.7 billion. As a reminder, 19 of 82 operating banks were
loss-making as of year-end 2017.
Profits 2018 largely come from foreign-owned
banks (UAH 15.0 billion of annual profits) and PrivatBank
(UAH 11.7 billion), while banks with Russian state capital registered losses
(UAH 11 billion of losses).
*This figure does not take into account
adjustments that may be made based on audit results.