Page 43 - UKRRptAug18

8.1.1 NPLs
The share of non-performing loans (NPL) in the total volume of loans in Ukraine in June 2018 fell by 0.37 percentage points (pp), to 55.68% as of July 1, 2018, according to the National Bank of Ukraine (NBU).
The central bank said that in particular, the share of NPL in the loan portfolio of state-owned banks fell by 0.77 pp, to 71.06%, including a 0.44 pp fall in PrivatBank, to 84.64%, in portfolios of foreign bank groups – by 0.29 pp, to 42.54% and banks with private capital – by 0.96 pp, to 24.09%.
The share of NPL in insolvent financial institutions grew by 10.92 pp, to 69.3%. The loan portfolio grew by 0.33% in June, to UAH1.125 trillion.
Since the start of the year, the share of NPL has grown by 1.13% and the portfolio has expanded by 3.09%.
The share of troubled assets of the banking system, taking into account off-balance sheet liabilities, was 29.21% (0.12 pp down) as of July 1, 2018. It was 0.88 pp more than as of late 2017. The total troubled assets grew by 0.04% in June, to UAH2.234 trillion, and by 1.6% since early 2018.
The NBU first published statistics for NPL meeting the requirements in resolution No. 351 dated June 30, 2016 on assessment of credit risks in March 2017. The resolution says that NPL notion as close as possible to the common notion in global practice "non-performing exposures/loans" (NPE/NPL).
According to the new rules, NPL are loans overdue for over 90 days (30 for banks) or it is unlikely that the debt without seizing collateral can be collected.
8.1.2 Banks specific issues
The National Bank of Ukraine (NBU) has simplified regulations regarding the taking out of foreign loans by domestic entities , the regulator reported on July 25. The collection of information on the registration, cancellation, and amendment of agreements regarding external loans extended to Ukrainian entities will be submitted to the regulator via special NBU software. Specifically, the central bank is cancelling the document revision procedure needed for external loan registration or amendment. The procedure could be applied when the signs of a "risky financial operation" appear. The new procedures will be enacted on August 20. Evgeniya Akhtyrko at Kyiv-based brokerage Concorde Capital believes that along with the recent simplification of dividend repatriation and easing restrictions on FX operations, deregulation in the registration of external loans is another step under the NBU’s policy of FE liberalisation.
Foreign-ownership of Ukrainian banks in 2017 dropped below the 30% driven by restructuring and the market exit of Russian-owned banks. The market share of Western-owned banks remained constant at 15-16%. The crisis-induced consolidation and restructuring has increased the market share of state-owned players to 58% which is not expected to change for the next 2 to 3 years.
43 UKRAINE Country Report August 2018 www.intellinews.com