In  the first seven months of 2016, the Ukrainian operating banks’ total losses shrank 3.3-fold as compared with the same period of the previous year, amounting to UAH 9.3 billion. As of 1 August 2015, the banks’ totaled UAH 30.2 billion. 

The decrease in losses was due to lower allocations to provisions against asset-related operations as the largest banks increased provisions  based on the results of the diagnostic studies conducted in 2015.

However, this year’s financial result of the banking sector before allocation to provisions and before tax was 60% lower than in the previous year, amounting to UAH 13.9 billion versus UAH 34.4 billion in 2015.

The banking sector’s weaker performance was primarily due to a further reduction in the income amid higher interest and administrative expenses.

In the first seven months of 2016, the banking sector's income decreased by 13% compared with the same period of the previous year, amounting to UAH 101.6 billion.

A UAH 1.5 billion decrease in the banks' income was primarily due to losses arising from trading operations, while in the seven months of 2015 the banks earned a profit of UAH 9.8 billion from these operations.  The profit earned by the banking sector in 2015 can be attributed to a faster pace of hryvnia depreciation, which enabled banks to generate a profit from dealing in foreign currencies. As opposed to 2015, this year the banks’ losses from such operations amounted to UAH 3.6 billion.

Interest expenses rose amid lower interest income resulting from the contraction of the loan portfolio and a worsening of the quality of the loan portfolio. As a result, interest income decreased by 20%, while commission income remained flat.

As of 1 August 2016, 33 operating banks posted a total loss of UAH 16.6 billion, including a UAH 1.1 billion loss incurred by 26 banks in July. 68 banks made a profit of UAH 7.4 billion, including a UAH 1 billion profit earned by 75 banks in July.