In 2016, the banking sector posted a record high loss of UAH 159.4 UAH billion. Significant net losses resulted mainly from the recognition of a loss of UAH 135.3 billion by PrivatBank in late 2016 due to additional loan loss provisioning.

The remaining solvent banks significantly reduced allocations to provisions compared to the previous year. Lower provisioning levels led to a 2.8-fold reduction in total losses incurred by banks to UAH 24 billion from UAH 66.9 billion in 2015. In particular, state-owned banks posted much lower losses (by UAH 21.5 billion) in 2016.

Another positive development is a 15% increase in net interest income, driven by a rise in interest income (by UAH 4.6 billion) amid lower interest expenses (UAH 1.2 billion). Growth in net interest income is an indication of the increased efficiency of the banking system in 2016. In addition, net commission income rose by 12% in 2016, supported by a recovery in demand for banking services and higher fees.

Overall, in 2016, 63 banks out of 96 solvent banks earned a profit of UAH 10.8 billion, while 33 banks generated a loss of UAH 170.2 billion. In 2015, 71 bank out of 117 banks posted a profit of UAH 5.2 billion as of 1 January 2016, while 46 banks incurred losses of UAH 71.8 billion.

In 2017, the National Bank of Ukraine expects the banking sector to return to profitability (excluding CB PrivatBank PJSC) due to lower provisioning levels and a stronger increase in interest income owning to a revival of lending to the real sector.