The transformation of the nonbank financial services market continued in Q4. The total number of institutions decreased by 96.
The russian war against Ukraine has complicated operating conditions for nonbank financial services providers and affected the timelines and quality of reporting. Market participants must mobilize their resources to resolve main problems promptly and continue their operations.
In order to facilitate the activity of nonbank financial institutions (NBFIs), the National Bank of Ukraine has eased a number of regulatory requirements and postponed submission of information and action plans for implementing recommendations given based on inspections held in 2022.
This is according to the quarterly Non-bank Financial Sector Review.
Insurers
In Q4 2021, insurers’ assets and gross premiums increased slightly, and claims paid rose by almost 20%. Throughout the year, insurers increased their investment income and remained profitable as of the whole of 2021. Assets, gross premiums, and claims paid of nonlife insurers decreased, which was mainly due to some insurers failing to submit their reports and being excluded from the register of insurers. Nonlife insurers remained profit-making as of the year-end, despite the loss made in the last three months.
The number of violators of solvency requirements decreased markedly. As of 1 January 2022, only four insurers were in violation of at least one out of the two solvency requirements.
Credit Unions
In Q4 2021, the credit union market continued to shrink gradually: the number of market players declined, loan portfolios decreased, and operating income dropped. Overall, the loan portfolio of credit unions decreased by 11%. The reported quality of the loan portfolio remained unchanged for three quarters in a row – the share of loans past due by more than 90 days stood at 14%.
Credit unions finished the year making a small profit, supported by lower provisioning.
As of 1 January 2022, three credit unions violated the required capital adequacy ratio, with two of them excluded from the State Financial Institutions Register in Q1 2022.
Finance Companies and Pawnshops
In Q4, the data on performance of financial institutions and pawnshops were the least complete. The sector’s assets grew overall: the finance companies that provided their reports showed significant quarterly growth in their assets, which rose by 30%. Lending was also on the rise.
The dynamics were slower with pawnshops: the market participants that submitted their reports had their assets almost unchanged, and their loan portfolios decreased.
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 nonbank financial institutions, such as insurers, credit unions, finance companies, and pawnshops. The review highlights key trends in the nonbank financial market and provides comprehensive insights into its performance.
Consolidated performance of NBFIs by segment: