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Banks’ NPL Portfolio Drops by UAH 9.6 Billion in First Nine Months of 2023

Banks’ NPL Portfolio Drops by UAH 9.6 Billion in First Nine Months of 2023

The banking sector’s portfolio of nonperforming loans (NPLs) amounted to UAH 422.5 billion as of 1 October 2023, which was UAH 9.6 billion less than as of 1 January. From the start of the year, the NPL ratio declined by 0.2 pp, to 37.9%.

In September, the banking sector’s NPL portfolio decreased by UAH 4.0 billion and the NPL ratio shed 0.6 pp thanks to writing off nonperforming retail loans and higher quality of new loans, which were mostly issued under state support programs.

According to the Bank Lending Survey published in October, demand for hryvnia corporate loans increased in Q3, as did demand for retail loans, with the majority of banks expecting further growth in their corporate and retail loan portfolios over the next 12 months.

The banks recognized credit losses at a slower pace this year compared to last year. The banks’ loan loss provisions made since the start of the full-scale war have reached UAH 107 billion, which accounted for almost 13% of the performing loan portfolio the banks had at the end of February 2022. 

At the same time, the resilience assessment of the banks and the banking system is underway. The preliminary results shows that the banks generally measure credit risks adequately, but some banks are likely to have to recognize additional losses from credit risk.

For reference: before russia’s military onslaught on Ukraine, the NLP ratio in Ukrainian banks had been declining steadily since 2018 (from 55% to 27% as of 1 March 2022), and the banks’ loan portfolio had been rising.

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