Page 47 - UKRRptDec22

deposits returned to growth, increasing by 2.2% for the first time since the start of the war. As the NBU allowed buying foreign currency to open FX term deposits, these deposits grew by 5.9% in the U.S. dollar equivalent.
Hryvnia corporate deposits increased by 3.7% qoq, whereas FX corporate loans decreased by almost 2% in U.S. dollar terms.
Client deposits dominated liabilities of the banks, accounting for 86.8%.
The banking sector generated UAH 12 billion in profits in Q3. The earned profits offset losses of H1, leading to a positive financial result in the first nine months of the year (UAH 7.4 billion).
The profitability was due to high operational efficiency. The banks’ interest income continued to grow, and their fee and commission income was recovering gradually. Gains from FX and securities revaluation boosted the total financial result. The cost-to-income ratio (CIR) in Q3 was 36.5%, compared to 44.6% in the same period last year.
At the same time, the financial institutions had to set aside large provisions for losses caused by the war. In Q3, UAH 33.5 billion was allocated for loan loss provisions and UAH 7.1 billion for securities provisions. The recognition of actual asset quality will continue, leading to further growth in provisions.
The NBU encourages the banks to apply a prudent approach to assessing credit risk, hold rational restructuring, and evaluate collaterals properly. Next year, the central bank will hold an asset quality review to make sure the banks use correct approaches to credit risk assessment.
47 UKRAINE Country Report December 2022 www.intellinews.com