In 2016, the money supply  expanded by 10.8%  to UAH 1,101.6 billion, driven by an increase in hryvnia deposits, according to preliminary monetary statistics data for December 2016 .

In 2016, the stock of deposits in domestic currency   rose by 8.7%, including by 4.0% in December. In 2016, the stock of deposits in foreign currency (in dollar terms) remained flat, while in December these deposits reported a 1.9% decline due to  the ongoing effect of situational factors that triggered a surge in FX market volatility.

Corporate deposits in both domestic and foreign currency showed strong growth.  In 2016, the stock of business deposits in domestic currency   rose by 12.0%, while those in foreign currency (in dollar terms) increased by 3.3%.  Deposit growth was underpinned by  a gradual recovery in economic activity, improvement of financial performances of enterprises, including thanks to  stronger export performance in H2 2016. Higher nominal household income contributed to the increase in household deposits (by 5.2% y-o-y).

 The year 2016 saw signs of revival  in bank lending activity, supported by the abundant liquidity of the banking system and a gradual reduction in the cost of financial resources in domestic currency.

In 2016, balances of loans in domestic currency rose by 17.5%, driven primarily by a 22.3% increase in corporate loans in domestic currency. However, the growth in loans was mainly attributed to the restructuring of debts on FX loans.

Balances of loans to households continued to decline. Domestic currency loans to households edged down  by 4.0% y-o-y, including by 0.8% m-o-m in December.

The restructuring of FX loans  led to a  year-to-date decline of 20.2% in FX loans  (in dollar terms).

See the Macroeconomic and Monetary Review (December 2016) for greater details on money market developments which will be published on  31 January 2017.