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8.0 Financial & capital markets 8.1 Bank sector overview
Thanks to the skill of the central bank, the March currency crisis broke with tradition and did not create a big devaluation and a run on the banks, Olena Bilan, Dragon Capital’s chief economist, said.
“During the crisis, the dynamics of the exchange rate surprised positively,” she said, noting that many predicted the government lockdown during the coronavirus pandemic would cause the hryvnia to plummet below 30 to the dollar.
She added: “For the first time in all crises we had almost no outflow of deposits from the banking system. It was very unexpected.” Noting that about 100 banks were closed during the 2014-2015 crisis, she said: “We now have a crisis of the real sector of the economy. But there is no crisis of the currency, banking, financial system. And this is to the great credit of the central bank.”
8.1.1 Earnings
So far banking profits have not been badly affected by the coronacrisis, although the first signs of a slowdown appeared in May. Ukraine’s banks profits are still running ahead of those of last year, which was the first year of strong growth since the economic meltdown in 2015.
Banks earned UAH28,964 ($1.1bn) over the first five months of this year, ahead of the UAH23,428mn they made in the same period last year.
49 UKRAINE Country Report July 2020 www.intellinews.com
