During the meeting between the senior officials of the National Bank of Ukraine and experts from the IMF's European Department that was held on 4 February 2013, Mr. Ihor Sorkin, Governor of the National Bank of Ukraine, provided an insight into the performance of the banking industry in 2012.

“The year 2012 was a challenging one for the banking industry, but, overall, it was a successful year,” said Mr. Ihor Sorkin.

In his speech, Mr. Ihor Sorkin released the following figures reflecting the performance of the banking system.

In 2012, Ukrainian banks delivered strong performance, in particular:

total assets of banks increased by 5% over the past year;

loans to the economy (corporate loans) grew by 5%;

liabilities were up by 7%, including a surge of 19% in individual deposits and an increase of 9% in corporate deposits;

non-performing loans (doubtful and bad loans) shrank by almost UAH 15 billion over the past 11 months of 2012, indicating that the situation with non-performing loans is showing signs of improvement;

banks’ authorized capital increased by 2%.

The key point, according to Mr. Ihor Sorkin, is that in 2012 the banking industry operated profitably, with financial figures showing a profit of UAH 5 billion. In 2011, the banking industry showed a loss of UAH 7.7 billion.

In his speech, Mr. Ihor Sorkin particularly dwelled on a set of key measures aimed at stabilizing the banking system, including:

1. Lowering the risks faced by the banks being members of financial groups

2. Enhancing the legal framework for handling toxic assets by banks.

3. Introduction of new approaches to building up provisions by banks against possible losses under active transactions.

4. Using a more streamlined approach to calculating banks' regulatory capital and liquidity ratios.

5. Simplification of the procedure of reorganization of a bank upon the decision of its owners.

6. Creation of a level playing field for the banks that have to repay stabilization loans granted during the crisis.

7. Joining the second phase of the Vienna Initiative in 2012.

Mr. Ihor Sorkin feels confident that the National Bank of Ukraine has created all the necessary conditions to reinforce positive trends in the banking sector and will make further efforts to ensure efficient functioning of the banking system of Ukraine.