Page 47 - UKRRptAug20

8.0​ Financial & capital markets 8.1​ Bank sector overview
New NBU governor says he will renew crediting, reduce NPLs. ​Kyrylo Shevchenko declared the renewal of crediting and maintaining macroeconomic stability as his top priorities in his first press briefing on July 20 as the newly appointed governor of the National Bank of Ukraine (NBU). Reducing the share of non-performing loans in commercial banks is crucial for renewing crediting, Shevchenko said. In addition, he said cooperation with international partners will remain a top priority, as well as maintaining the NBU’s independence.
Shevchenko also mentioned that the commercial banks should be “limited” in using long-term securities as this reduces their liquidity, which could be used for lending. While answering journalists’ questions, he underscored that the NBU will maintain a floating exchange rate, and the NBU will not regulate it as long as the exchange rate doesn’t go beyond “acceptable limits”.
In emphasizing the new policy of crediting the real economy by commercial banks. Shevchenko was merely echoing the words of President Zelensky, who stressed that “real loans for Ukrainian business and accessible mortgages for individuals” are long-awaited things at the very same press conference introducing the new central bank governor. It looks like enhancing accessible loans is the latest one-off stunt by the Zelenskiy administration, which could see this as a tool that might renew the public's trust and stop the sliding poll ratings.
Despite losses in June the banking sector remains healthy ​thanks to the bank sector clean up conducted by the National Bank of Ukraine (NBU) over the last few years and is able to weather the storm for the meantime.
The capital adequacy ratio (CAR) – the share of cash banks keep on deposit to meet demand – has actually improved in the last two months rising above 20% in June and July. While the mandatory minimum is 10% typically emerging market banks tend to keep twice as much cash available to deal with the regular shocks to the system. It seems as the crisis approached banks were shoring up their reserves in anticipation of a big shock and maintain very prudent lending policies since.
47​ UKRAINE Country Report​ August 2020 ​ ​www.intellinews.com