In January–June 2021, solvent banks made UAH 30.1 billion of net profit, up 26% from the same period last year, when the banking sector earned UAH 23.8 billion. Return on equity in the sector increased to 29% compared to 23% in H1 2020. In Q2 2021, banks reported UAH 19.1 billion in net profit. It was 2.5 times the level of Q2 2020. To a great extent, it was due to a significant drop in provisions by about 70% yoy in H1. Loan loss provisions fell by over 40% yoy, returning to pre-crisis levels.
Banks quickly adjusted to working under quarantine restrictions, maintained high operating efficiency, and significantly increased their net interest and commission income compared to the challenging year 2020.
Net interest and commission income grew by about 30% yoy due to a downtrend in the cost of resources, a recovery in consumer lending, and an increase in cashless retail transactions. In general, banks’ operating income decreased by 2%, and expenses grew by 12% over the first six months of this year. The main reason behind the decrease in earnings was the revaluation of indexed securities, which boosted profit last year but has limited profit this year. The generated income covers the operating expenses and loan loss provisions by a wide margin.
As of 1 July 2021, 63 out of 73 solvent financial institutions were profitable and made net profits of UAH 30.3 billion, offsetting the UAH 0.2 billion in losses incurred by 10 banks.