As of 1 January 2025, the ratio of non-performing loans (NPLs) in the banking sector decreased to 30.3%, down by 7.1 percentage points from 1 January 2024. In 2024, NPLs declined in volume from UAH 29.1 billion to UAH 393.2 billion. The trend of a gradual decrease in NPL volumes has continued since the beginning of 2023.
The key drivers of the decline in the NPL ratio include:
- further increase in the volume of high-quality hryvnia loans by banks, due the gradual recovery in demand for loans and improved lending conditions, including a reduction in lending rates to the level of the end of 2019, before the outbreak of COVID-19. In 2025, gross loans in the banking system increased by UAH 167.5 billion, or 14.8%
- writing off NPLs, primarily retail loans. The NPL ratio in the retail loan portfolio has dropped over the period by 8 pp, to 15.5%. At the same time, the quality of corporate debt resolution has also slightly improved: the NPL ratio in corporate loans has decreased by 5.2 pp, to 39%.
The NPL ratio has reduced across all groups of banks, specifically:
- to 12.6% at Ukrainian private banks
- to 10.9% at foreign-owned banks
- to 43% at state-owned banks.
Excluding the debts of the former owners of CB PrivatBank JSC and legacy debts remaining from the times before the the banking system’s rehabilitation during the 2015–2017 crisis, as of 1 January 2025, the NPL ratio was 24.8% for state-owned banks and 18.6% for the banking system as a whole (below 20% for the first time since October 2022).
The quality of the performing portfolio remains high: the rates of migration of hryvnia retail and corporate loans to NPLs are comparable to the pre-war levels. The analysis of the financial standing of corporate borrowers indicates that banks’ portfolios are dominated by loans of good-faith customers.
At the same time, the leverage is not excessive: businesses’ debt burden remains moderate, close to pre-war levels, while the ratio of retail loans from banks and non-bank financial institutions to the annual household income is only 10%.
According to the results of the quarterly Bank Lending Survey, banks will continue to expand their loan portfolios. However, according to the respondents, the loan quality is expected to somewhat deteriorate. Specifically, some large banks had more pessimistic expectations of the retail portfolio quality.
Before russia’s military onslaught on Ukraine, the NPL ratio at Ukrainian banks had been declining steadily since 2018: from 55% to 27% as of 1 March 2022.