January through June 2022, banks generated negative financial result of UAH 4.6 billions. In Q2, net loss in the sector accounted for UAH 4.5 billion.
Growth rates of the net interest income decelerated from 35% yoy in January – February to 19% yoy in March – June. All of the large banks offered loan repayment holidays, and some financial institutions temporarily reduced their rates on consumer loans. This caused a major drop in interest income in the retail segment.
Suppressed demand for banking services resulted in reduction of commission income. The net fee and commission income decreased by 35% yoy in March – June yoy in contrast to growth by 15% yoy in January – February.
Instead, operating result of banks remains positive: net pre-provision operating profit in Q2 amounted to UAH 33.5 billion comparing to UAH 23.5 billion in Q2 2021.
A loss in H1 resulted from major provisioning for war-related expected losses: banks allocated UAH 57.9 billion, whereof in March – June UAH 52.1 billion.
“Materialization of credit risk due to a full-scale war caused the banking sector to generate losses for the first time in five years. Loan loss allowances will continue to increase.
In order to maintain operating performance, banks should adjust their business models to operating in crisis, as well as properly disclose financial indicators. That shall promote financial resilience of the banking sector,” said Yaroslav Matuzka, NBU Deputy Governor.
As of 1 July 2022, 47 out of 68 banks remained solvent and made net profits of UAH 10.0 billion, and other 21 banks generated losses of UAH 14.6 billion.