Page 39 - UKRRptMar20

8.1.2​ Loans & deposits
Another positive sign of the recovery of the financial sector is the rise of both deposits and loans.​ As the chart shows deposits have been rising, which remain the main source of bank funding to make loans, and run well ahead of credits. Indeed as the economy and incomes continue to improve in the last quarter of 2019 deposits picked up noticeably in December.
Overall, retail lending has been growing over the last two years ​and was up 30% in 2019, according to the NBU, but is volume remains about a quarter of the size of corporate lending which has been doing less well.
Financial services companies loaned out $2.9bn or UAH70bn to consumers in 2019​, National Financial Services Commission member Oleksandr Zalyetov. The lion’s share was made up of online loans. In July the National Bank will assume new powers and become the main regulator of insurance, leasing, financial companies, credit unions, pawnshops and credit bureaus.
While corporate lending recovered between the middle of 2016 and 2018, since November 2018 it has fallen off again​, pulling the overall volume of new loans made in 2019 down to a mild contraction from UAH847bn in January 2019 to UAH822bn as of this January.
With the overnight central bank rate of 11% (and a real interest rate of a punishingly high c.9%) the cost of capital in Ukraine is still too high ​for bank credits to be a viable source of investment capital. The NBU has made a series of very deep rate cuts in the last few months and is almost certain to continue this policy in 2020 so corporate loans may improve as the year wears on.
The government has been trying to support credits, ​especially to small and medium-sized enterprises (SMEs) as a way of boosting economic growth. Almost 17,000 small and medium businesses signed up for the government new “Credits 5-7-9%” before the program was launched at the start of
39​ UKRAINE Country Report​ March 2020 ​ ​www.intellinews.com