In Q2, the activity of non-bank financial service providers continued to decline, and volumes of main financial services decreased. The volume of assets decreased in all categories of non-bank financial institutions (NBFIs) except for insurers. The share of NBFIs in total assets of the NBU-regulated financial sector shrank by 0.4 pp, to 11.8%.
In order to maintain market discipline and protect consumer rights, the NBU has resumed imposing corrective measures on participants of the non-bank financial services market for failing to submit reports, violating certain required financial ratios, and engaging in risky activities. The regulator also introduced a number of requirements for non-bank institutions that trade in FX cash.
This is according to the quarterly Non-bank Financial Sector Review.
Insurers’ assets grew in Q2 2022 despite the decrease in the number of companies on the market. At the same time, volumes of gross insurance premiums and claims paid on non-life insurance declined in quarterly terms by 10% and 14% respectively.
Gross premiums of life insurers in Q2 decreased by 27%, while their claims paid rose by 5%. Assets of life insurers continued to grow.
Insurers showed high profitability in H1. This was largely due to a sizeable cut in expenses other than operating expenses.
As of 1 July 2022, 15 insurers violated at least one of solvency and risk requirements, but some of them recovered their financial standing in Q3.
In Q2 2022, volumes of assets and the number of reporting credit unions continued to decrease. Credit unions’ loan portfolio shrank by 6% in Q2.
The profitability of credit unions grew somewhat due to a significant decrease in provisioning costs, resulting in almost a twofold increase in retained earnings. Meanwhile, deposits and additional share contributions continued to decline in volume by 7% and 1% qoq, respectively.
Finance Companies and Pawnshops
Around a quarter of finance companies and pawnshops did not submit performance reports in Q2. The segment saw a sharp decrease across all financial services: lending (dropped by 57% at finance companies and by a third at pawnshops), leasing, and factoring. Almost no guarantees have been issued since the start of the full-scale invasion. Finance companies recorded a weak profit in H1 2022, but the majority of companies remained loss-making. Pawnshops were loss-making in Q2.
The Non-bank Financial Sector Review is a quarterly report that was first published by the National Bank of Ukraine in October 2020.
It focuses on the activities of NBU-regulated non-bank financial institutions, such as insurers, credit unions, finance companies, and pawnshops. The review highlights key trends in the non-bank financial market and provides comprehensive insights into its performance.