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Financial Sector Resilience to High-Impact Adverse Events Remains Unchanged Despite High Risk Assessments – Systemic Risk Survey

Financial Sector Resilience to High-Impact Adverse Events Remains Unchanged Despite High Risk Assessments – Systemic Risk Survey

In the May 2022 Systemic Risk Survey, respondents’ assessments of the current state of the Ukrainian financial sector fell to the lowest level since May 2018, when the surveys began.

As many as 88% of top managers reported a deterioration in financial sector conditions over the past six months. The balance of responses was more than two times worse than at the onset of the coronavirus crisis.

Most financial executives expected a further deterioration in the financial sector’s condition in the next six months, while only 9% of those surveyed predicted an improvement.

The share of respondents estimating the level of risk in the financial sector as high or very high was 94%.

At the same time, the overall assessment of the financial sector’s resilience to high-impact adverse events changed little compared to the end of 2021. Almost half of all financial institutions assessed the financial sector’s resilience as at a medium level. The percentage of respondents who viewed the financial sector’s resilience as high or very high even slightly grew.

Respondents were unanimous that the war against russia was the main source of risk. Macroeconomic factors mostly made the rest of the largest sources of risk: inflation, exchange rate, changes in investment inflows, asset value, and collateral quality. The factor of fraud and cyber-attacks also remained among the major threats, being ranked the sixth. In contrast, corruption, the performance of law enforcement authorities, and the judiciary, which had been leading risks since 2018, were not even among the top ten major sources of risk.

Financial institutions’ risk appetite decreased considerably over the past six months, falling to its lowest level since H2 2020.

The next Systemic Risk Survey will be published in November 2022.

For reference

This survey was carried out from 12 May through 25 May 2022. Executives from 22 banks, 12 insurance companies, and 1 investment firm took part in the survey. Financial institutions under special economic measures and other restrictions (sanctions) have not been surveyed. Summary results were calculated by giving equal weight to each survey response, regardless of the size of the bank/company, or its market share.

Conducted by the NBU twice a year, the Systemic Risk Survey looks into how the largest banks and nonbank financial institutions perceive existing and potential risks to the financial sector. The poll reflects how financial institutions’ top management assess the financial sector’s performance over the past six months and what they expect for the next six months.

The results presented in the survey are based on respondents’ opinions and do not necessarily reflect the NBU’s assessment of financial system risks.


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