Page 45 - UKRRptDec19

NPLs % of loan book
Oct 2018
Oct 2019
ratio of non-performing loans, %
54.31
48.93
incl. banks:
with state participation, of which:
69.40
63.69
CB "PRIVATBANK" PJSC
83.31
80.69
other than CB "PRIVATBANK" PJSC
57.42
48.42
belonging to foreign banking groups
41.73
34.09
private
24.72
20.15
insolvent
52.22
0.00
Source: NBU
i
Despite the growth in profits the level of non-performing loans (NLPs) in the bank sector remain extremely high​. The sector average of NPLs has fallen under 50% for the first time in years this summer and was 48.9% as of October this year, however, the distribution of NPLs remains very uneven.
One piece of good news is that the NPLs of the banks deemed insolvent have been written down and their share to the overall NPLs in the sector have been removed, improving the health of the whole sector. Another piece of good news is that the most of the NPLs have been provisioned for so they do not represent a systemic risk to the system. But the downside of this prudence is that a lot of banking capital is now tied up as provisions for bad debt. However, as the sector continues to return to health and these bad debts are either paid off, or written off, the release of capital provisions means the sector can dramatically accelerate once the momentum towards recovery begins to build as this capital becomes available to fund lending.
While NPLs amongst the state-owned banks is still a high 63.7% the average s pushed up by Privatbank, which was nationalised in December 2016 and
has an NPL ration of 80.7%. That high NPL ratio is a result of its former owner oligarch Ihor Kolomoisky strip mining the bank of its deposits and walking off with an estimate $7.6bn in assets, the new management of Privatbank told ​bne IntelliNews i​ n an interview in July. Although Kolomoisky has been ordered to return this cash, he has so far ignored the NBU demands and has returned to Ukraine where he has gone back into business with impunity.
Counting out Privatbank from the state bank portfolio and the picture looks better with NPLs at state-owned falling slowly but steadily to 48.4% as of October, according to the National Bank of Ukraine (NBU). Foreign owned banks look even better with 34% NPLs and privately owned banks reporting NPLs of 20%.
Privatbank stands out as the single biggest problem for the banking system. Kolomoisky has been trying to force the government to return the bank to his ownership in a blizzard of law suits. However, the NBU says that if the courts order the bank returned the central bank will removed the circa $5.5bn of
45​ UKRAINE Country Report​ December 201 ​ ​www.intellinews.com