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for credit losses.
On a cumulative profits year to date basis banks had earned UAH17,538mn ($634mn) in April, which was less than the outstanding UAH25,208mn the sector earned the same month a year earlier and on a par with the UAH18,115mn banks had earned by April in 2019. Profits of banks in 2017 and 2018 were half as much as the economy was still suffering from the after shocks of the almost complete economic collapse that came with the Revolution of Dignity in 2014.
On a month-on-month basis banks earned UAH6,603mn ($239mn) in April, which was also down on the UAH9,234mn the sector earned in the same month a year earlier, but ahead of the UAH5,213mn from 2019 and well ahead of the years before that.
On a monthly basis Ukraine’s banks have been running behind the results of 2020 in every month since the start of this year, but they will almost certainly overtake the previous performance as they enter the pandemic crisis period.
A better benchmark for this year’s performance is 2019 and so far the sector has been tracking that very closely since February and comfortably outperforming in April in a year-on-year comparison.
Given the other factors in the sector continue to improve the outlook for sector is positive for this year.
Loans, Deposits & NPLs
The assets of banks continue to climb steadily and the sector is adequately funded by the rising deposits; assets reached UAH1.8 trillion ($67.4bn) in April this year, up from UAH1.5 trillion in January 2020 and UAH1.3 trillion in January 2019.
Bankers are optimistic about lending prospects for the next 12 months, according to the NUB’s quarterly survey. Of credit managers polled, 78% predict an increase in the loan portfolio of corporations, 82% predicted an increase in loans to households -- the highest rates since 2015. Completed on April 9, the survey polled credit managers of 23 banks. These banks represent 88% of the banking system’s assets.
Corporate lending remains underwhelming with UAH792,320mn ($28.6bn) extended to corporate in April. And retail lending has slowed in recently months, but showed signs of picking up again in April as the mood amongst consumers is clearly brightening on the back of the economic recovery. Banks extended UAH215,292mn ($7.8bn) to retail customers in April, which is in the range of monthly retail lending for at least a year. The current recovery is not, for the moment, being funded by a boom in retail credits.
Finally the return to profitability has been allowing banks to retire non-performing loans (NLPs) where the situation continues to improve, although it will take at least three more years for foreign- and privately-owned banks to bring NPL ratio down to normal levels and much longer for the state-owned banks.
The main problem in the sector is the extremely high NPL ratio at now
44 UKRAINE Country Report XXXX 2018 www.intellinews.com