Page 44 - UKRRptJan22

8.1.2 Loans
Ukrainian households borrowed a record $1.8bn (UAH49bn) in microloans between January and October 2021, according to Opendatabot. That’s $10mn more than in all of 2020. The average loan amounted to $165 (UAH4,500). These kinds of small loans are heavily advertised on Ukrainian TV channels, promising easy money for borrowers to make ends meet or buy expensive gadgets. Despite their convenience, interest rates on microloans can add up to a staggering 510% per year on average, according to a study by the United States Agency for International Development. Borrowers often overlook this fact, thinking they can pay the money back quickly. As a result, the total debt for overdue microloans has increased by 5% to $570mn in the first nine months of 2021.
The number of mortgage loans issued in Ukraine for three quarters of the year doubled - up to 7,500 for UAH6.1bn ($225mn). The total volume of the state program of preferential mortgages with lower interest rates recorded only 1287 applications and issued 903 loans worth UAH776.6mn. According to opendatabot.ua, in the first three quarters of this year, 218,400 transactions for the purchase and sale of apartments and houses were concluded. Only 3.4% of housing in the country is purchased using mortgage finance.
The NBU will raise the risk of consumer credit to 150%. The National Bank of Ukraine (NBU) will increase the risk weight for unsecured consumer loans from 125% to 150% from January 1, 2022, announced NBU. It is noted that such changes will help banks create an adequate reserve of capital to cover unexpected losses from the deterioration of portfolio quality of unsecured consumer loans. In addition, the resolution is designed to increase the resilience of creditors to potential crises, promote proper accounting, maximize the benefits, and minimize the risks of working in this segment.
44 UKRAINE Country Report January 2022 www.intellinews.com