In January–September 2022, solvent banks made UAH 7.4 billion of net profit, compared to the same period last year, when the banking sector earned UAH 51.4 billion. The sector’s return on equity in the first nine months of 2022 was 4.3%, down from 32.1% in January-September 2021. These dynamics were primarily driven by the increase in provisioning for incurred and expected losses inflicted by the full-scale war. Since the start of the year, the banks have made UAH 99.0 billion in provisions, including UAH 93.3 billion in March–September.
The growth rates of the net interest income in the first nine months of 2022 decelerated from 35% in January–September 2021 to 26% yoy due to a decrease in interest income in the retail segment. In the earliest months of the full-scale war, all of the large banks offered loan repayment holidays, and some financial institutions temporarily reduced their rates on consumer loans.
The net fee and commission income decreased by 16% yoy in January–September 2022, compared to an increase of 28% yoy in the same period of last year. Although demand for banking services is gradually recovering from the shocks it suffered at the beginning of the full-scale military aggression, it still remains lower than last year, reducing the banks’ commission income.
The banks have retained positive operating profitability: net operating profit before provisioning grew by 78% yoy in the first nine months of 2022. In particular, in Q3 2022, net operating profit before provisioning amounted to UAH 56.5 billion up from UAH 25.7 billion in Q3 2021.
"The banking sector’s ability to maintain operating profitability during the war demonstrates that the banks’ business models are geared towards profit generation while taking into account a balanced approach to risks. The banks have learned to work efficiently, diversifying their portfolios and taking into account interest, market, credit, and operational risks. Efforts to maintain operating profitability will allow most banks to recover their capital on their own after the current crisis bottoms out,” said NBU Governor Andriy Pyshnyy.
As of 1 October 2022, 44 out of 67 solvent banks remained profitable and made net profits of UAH 25.6 billion, and the other 23 incurred losses of UAH 18.2 billion.