Page 48 - UKRRptNov18

8.1.1 Earnings
The Ukrainian banking sector made a net profit of UAH13.8bn ($490mn) in January-August, according to the NBU. The result was mainly attributed to the fact that retail lending and fee and commission income continued to drive operating income. The central bank believes that the banking sector will be profitable as of the year-end.
8.1.2 NPLs
8.1.3 Banks specific issues
According to the NBU, the share of non-performing loans (NPLs) in the total volume of loans in Ukraine fell by 0.37 percentage points (pp) in June, to 55.68%, as of early July.
The NBU wrote in its May's review on the nation's banking sector that the high NPL rate remains a major challenge to the banking sector, and this particularly concerns state-owned banks. "The banks need to step up their efforts to workout NPLs, and finalize their NPL resolution plans for 2018," the document reads.
Eight out of 24 Ukrainian banks need capital injections , the National Bank of Ukraine (NBU) said in a statement on October 4. The banks account for more than 90% of the assets of the entire banking sector and recently participated in recent stress tests run by the NBU, which concluded they require additional capitalisation of the total amount of UAH6.1bn ($217mn). Over the past years, the NBU withdrew the licences of more than 100 lenders, in many cases because of involvement in money laundering or for a lack of transparent ownership structure. The number of banks operating in Ukraine fell from 180 in early 2014 to 82 today. According to the regulator, the eight banks should to complete the capitalisation program before the end of this year. The Ukrainian banking sector made a net profit of UAH13.8bn ($490mn) in January-August. The 2018 results were mainly attributed to a rise in retail lending and fee and commission income which are driving operating income. The central bank believes that the banking sector will be profitable as of the year-end. The NBU's first deputy governor Kateryna Rozhkova told journalists on October 4 the regulator is currently discussing the possibility of postponing the implementation of the capitalisation programme by the end of March 2019. As part of a stress test under the unfavourable scenario, another five banks require recapitalisation, along with these eight banks. The total capital requirement of 13 banks under an unfavourable scenario is UAH42.1bn, Interfax news agency reported the same day. To meet the capital requirements under an unfavourable scenario, banks must develop and implement a restructuring plan by the end of 2019.
Ukraine's parliament, the Verkhovna Rada, has greenlighted a new code for treating insolvent debtors that is set to radically improve the protection of creditors , as well as simplify the procedures of debt restructuring, debtors’ financial recovery and liquidation. The document also introduces a mechanism of bankruptcy of individual debtors. The legislation grants more power to creditors in control of insolvent debtors, sets time limits on procedures related to debt restructuring, financial recovery or liquidation, as
48 UKRAINE Country Report November 2018 www.intellinews.com