Hryvnia lending continued to surge, making the main contribution to the growth in banking sector assets for the third consecutive quarter. Market lending outside state support programs continued to prevail, the quality of the portfolio remained high, and loan rates decreased. These are the takeaways from the Q3 2025 Banking Sector Review.
According to the review, after a pause that started with the full-scale invasion, the growth in loan penetration to GDP has been accelerating for three consecutive quarters (net corporate loans already account for 8.4% of GDP, while retail ones account for 3.2%).
Over the quarter, lending to private companies and some state-owned enterprises continued to rise intensively. The largest recipients were businesses engaged in trade, financial services, machine building, agriculture, the energy sector, and food industry. Loan portfolios continued to increase across all groups of banks, with the fastest growth recorded at state-owned banks.
In annual terms, long-term loans for capital investments grew more rapidly, so the share of long-term loans in the net hryvnia corporate portfolio rose and exceeded 25%.
Thanks to affordable terms, the portfolio was growing primarily outside the scope of state support, which drove the share of subsidized loans in the hryvnia corporate portfolio down to 27.4%. At the same time, the volume of loans to enterprises of the defense industry provided under the state support program reached about UAH 5 billion.
The retail loan portfolio was dominated by unsecured loans, while the share of mortgages in this portfolio increased to 13.4%.
The quality of the loan portfolio continued to improve: the NPL ratio fell to a ten-year low of 25% (14.3% excluding legacy loans of state-owned banks recognized as non-performing during the 2015–2017 reform, including debts of PrivatBank’s former owners).
In Q3, for the first time since the start of the year, the banks increased their portfolios of domestic government debt securities, in response to a higher supply of these securities from the government, while the holdings of certificates of deposit decreased.
The bank’s liabilities continued to grow primarily due to an increase in the volume of retail deposits. The share of term deposits remained almost unchanged over the quarter (33.9%), and the dollarization of retail deposits dropped to 33.6% on the back of a faster growth in hryvnia deposits.
Hryvnia corporate deposits returned to growth after a temporary decline caused by state-owned companies making significant expenditures from their accounts with state-owned banks to purchase energy and equipment.
The banks made almost no changes to their rates on client deposits over the quarter. The cost of funding was primarily influenced by the maturity structure and the distribution of deposits among the banks.
Market rates on hryvnia loans to businesses decreased from the situational peak of 16% per annum in July, to 15.3% per annum in September. The lowest average rate, 13.7%, was offered by foreign banks.
The sector received UAH 39.9 billion in profit in Q3 2025. Lending continued to be the driver of the profit, with the share of interest income from loans in total interest income rising to 47.8% over the quarter.
As of now, operating banks are not violating the current minimum capital requirements, including the leverage ratio.
The NBU will determine the timeline for activating the capital conservation buffer and the systemic importance buffer by the end of the year to allow for a gradual buildup of the buffers without hampering the lending potential. The NBU also plans a review of the approach to assessing the maximum large exposure per counterparty (LEX) for the banks by the end of the year.
The introduction of an increased profit tax rate of 50% in 2026 may become a challenge for the sector. If adopted, such a decision will have a negative impact on the sustainability of the sector, its lending activity and investment attractiveness, and the prospects for the privatization of state-owned banks.
Data on loans and deposits published in the Banking Sector Review differs from the corresponding data posted in the Monetary Statistics section of the NBU’s official website, because the former:
- contains information on the banks that were solvent as of the reporting date unless indicated otherwise
- includes data from bank subsidiaries operating abroad
- contains data on deposits in other resident and non-resident banks
- has been adjusted for loan loss provisions unless clearly stated otherwise
- contains data on personal certificates of deposit unless indicated otherwise
- contains information on non-resident clients.