Page 52 - UKRRptAug22

8.0 Financial & capital markets 8.1 Bank sector overview
Banks predict a drop in loan demand among Ukrainians. Next year, banks expect a reduction in the household credit portfolio, a deterioration in the quality of loans, and a decrease in the amount of funding, according to the results of an NBU survey. Most respondents predict a reduction in corporate and retail lending volume in the next 12 months. Concurrently, estimates of the prospects for the recovery of consumer lending have slightly improved compared to the previous quarter. Banks believe that the quality of their loan portfolios will deteriorate. Respondents expect a reduction in funding in the next 12 months but are more optimistic about the prospects for attracting public funds than in the first quarter. In the next three months, banks predict that all types of risks will continue to increase.
Banks did not stop working even for a single day since the war started on February 24. In general, more than 85% of branches of large banks are now open in the country, compared to 55% at the beginning of March. The work of branches is resumed on the condition that the lives and health of customers and employees are not threatened. All critical processes are supported, data is saved. The Covid-19 crisis ensured the establishment of remote work. Banks were able to easily transfer many functions to the digital plane. Even in the first days of the war, the National Bank normatively regulated the process of using cloud services by banks and processing centers. Therefore, the banking system is currently at a high level of digitalization.
The NBU follows a policy of regulatory easing to help banks get through the crisis. We do not apply enforcement measures to banks for non-compliance with capital and liquidity requirements during martial law. In addition, from the end of July, the risk weights for unsecured consumer loans will be reduced from 150% to 100%. Banks will be able to use the accumulated capital stock to cover credit losses.
52 UKRAINE Country Report XXXX 2018 www.intellinews.com