The National Bank of Ukraine (NBU) has approved the methodology for 2025 stress testing of banks to be launched in June.
Please be reminded that stress testing is one of stages of the banks’ resilience assessment. This year 21 banks are to be stress tested that account for 90% of the banking system assets.
In 2025, the NBU relaunched stress testing of banks also under an adverse scenario. Previous bank resilience assessment in 2023 included only the calculation of performance indicators for the following three years under the baseline macroeconomic scenario based on the NBU’s macroeconomic forecast.
Further adjustment of banks to martial law conditions, expansion of lending and balance sheets requires a more extended risk assessment. Stress testing under an adverse scenario will help gauge banks’ resilience to possible adverse events in the future.
The NBU’s adverse scenario for stress testing shows a hypothetical deep and prolonged crisis. The assumptions of deep crisis are based on the EU's bank stress testing practice. Specifically, the adverse macroeconomic scenario assumes a -3.1% drop in GDP in the first year. For other assumed changes in macroeconomic indicators for stress testing in 2025 follow the link.
The forecast horizon for stress testing is traditionally three years. The balance sheets of banks will be static in the forecast period: the asset structure and volume will remain the same (save for changes caused by risk effects and exchange rate revaluation).
Also, conventionally stress testing assumes that credit and market (interest rate and currency) risks will materialize.
- The credit risk arises due to deterioration in the quality of loans. The quality deterioration parameters are determined for loans of big corporate borrowers individually and for other loans on portfolio basis.
- The interest risk in the adverse scenario is realized on the account of unchanged interest rate on assets and increase of that for liabilities.
- FX risk results from revaluation of an open currency position due to depreciation, change in the FX risk component as part of the market risk, as well as indirectly through credit and interest risks.
Additionally, the NBU also provided in the adverse scenario for the impact of operational risk on the banks’ capital.
Following the stress testing, the required capital adequacy ratios will be set for banks to prevent violations of regulatory requirements and insolvency, even under crisis conditions.
If an estimated capital adequacy for a bank is above the required values, the bank will have to draft a re-capitalization/restructuring program. The program performance should ensure compliance with the required capital adequacy ratio.
Further information on resilience assessment findings will be published by the end of this year.
The stress testing approaches were approved by NBU Board Decision No. 156 On Amendments to the Terms of Reference on Assessing Resilience of the Banks and the Banking System of Ukraine in 2025, dated 6 May 2025, which came into effect on the adoption date.
Regular resilience assessments of Ukraine’s banks have been carried out annually since 2018, except for 2020 and 2022, when the Covid-19 crisis hit and russia launched the full-scale invasion. After the hiatus, the assessments resumed in 2023, based on data available on 1 April, but this time a number of specific features were added. The 2023 assessment showed that most banks in Ukraine had sufficient capital and that the banking system as a whole had a high margin of safety. Some of the banks have since been implementing capitalization/restructuring programs greenlighted by the NBU. No resilience assessment has been carried out in 2024, as the previous results remained relevant.
Indicators set out in NBU Board Decision No. 156 dated 6 May 2025, including exchange rate, are not the NBU's forecast. This is only an assumption as part of stress testing scenarios.