Page 44 - UKRRptFeb23

8.1.2 NPLs
The share of non-performing loans (NPLs) in Ukraine reached 37% in December 2022, the highest level since the nationalisation of Privatbank in 2016.
The largest share of NPLs amounts to UAH188.1bn ($5.1bn) concentrated in Privatbank, which constitutes 43.8% of all non-performing loans in Ukrainian banks. It is followed by state-owned Oschadbank at UAH65.9bn ($1.8bn) and Ukreximbank at UAH48.2bn ($1.3bn).
According to NBU estimates, by the end of the war, the share of overdue loans may reach 60%, which will result in banks losing their profits and may lead to a wave of bankruptcies.
If a bank’s NPL expenses exceed its income, it will gradually lose liquidity and will not be able to conduct even customer cash transactions. Additionally, significant shares of non-performing loans in bank portfolios may limit their lending ability when it comes to the reconstruction of the Ukrainian economy, FPRI BMB Ukraine reports.
Ukrainian banks lost at least 30% of their portfolio on February 24, 2022 alone. Experts predict that to cover the losses to bank assets during the war, banks will try to maximize their profits by increasing interest rates. This may also happen because borrowers are behind on making scheduled loan payments during the war.
Analysts in Ukraine agree that the ability of banks to issue loans after the war will depend on the volume of international investment in the economy and the amount of reparations that Russia pays to Ukraine, so a high share of non-performing loans in bank portfolios will not put an end to lending.
NPLs % of loan book
Oct 20
Oct 21
Oct 23
ratio of non-performing loans, %
45.62
33.26
35.54
incl. banks:
with state participation, of which:
61.9
50.63
50.58
PrivatBank
79.24
70.21
70.65
state banks ex-PrivatBank
43.54
34
35.85
Foreign owned
30.67
20.51
16.73
Privately owned
16.81
10.46
20.55
Insolvent
0
0
0
Source: NBU
44 UKRAINE Country Report February 2023 www.intellinews.com