The National Bank of Ukraine has published its fourth Financial Stability Report. The report provides an analysis of the risks and threats to the stability of Ukraine’s financial system.
The report primarily focuses on risks to the banking sector. The risk map on page 6 of the report shows the expected change over the next six months for major risks: credit, capital adequacy, liquidity, profitability, currency, and legal. In addition, the report covers consumer lending and cyber security risks.
Banks have re-started lending to households and businesses. This report identifies the sectors that are most prepared to borrow based on their financial position and development prospects. The report also includes an analysis of the outlook for retail lending.
In addition to the comprehensive analysis of the key sectors’ positions and risks, the report outlines the NBU’s plans for 2019. The report focuses attention on changes in banking sector supervision that are coming from 2018 through to 2020.
Financial stability is closely related to the NBU’s priority of ensuring price stability. One of the regulator’s key mandates (pursuant to the Law of Ukraine On the National Bank of Ukraine) is to safeguard financial stability and the stability of the banking system.
All branches of government and market participants contribute to the safeguarding of financial stability. Coordinated action by all stakeholders is required to ensure stability. This report makes recommendations to the government and to banks that will contribute to the stability of the financial system and help participants weather current and future risks. The Financial Stability Report is primarily directed towards financial market participants, authorities, and other stakeholders of Ukraine’s financial system. The analysis and conclusions within this report are designed to help economic agents and media representatives better understand current risks and their potential impact on financial stability, as well as the nature and intent of the regulator’s measures.