Page 72 - UKRRptFeb24

military risk zone, and ₴700M for implementing investment projects. Recipients include enterprises working in the fields of agriculture (48%); wholesale and retail trade (26%), and the processing industry (17%).
In Ukraine, the yield on deposits has increased, but loans have become more expensive. In December 2023, the average bank interest rate on new consumer hryvnia deposits amounted to 11.7% per annum. A year ago, the figure was 8.2%, NBU data shows. Rates on new consumer deposits in foreign currency increased from 0.7% to 1%. Interest rates on commercial hryvnia deposits rose from 7.6% to 10.3% per annum, and foreign currency fell from 1.4% to 0.5% per annum. Bank deposit portfolios grew by 26.4% to ₴2.4T. Meanwhile, the average interest rate on new consumer hryvnia bank loans in December amounted to 33.7% per annum. Over the last year, rates increased by 4.3 percentage points. Interest rates on household loans in foreign currency increased from 5.3% to 6.4% per annum. Interest rates on commercial hryvnia loans have risen from 16.6% to 17.5% per annum, and for foreign currency loans, from 4.6% to 6.4%. The total loan portfolio decreased by 1% to ₴998B.
Ukrainian businesses go into standby mode, taking fewer loans and increasing reserves to record levels. According to the NBU, in 2023, the volume of loans granted to legal entities decreased by 2% to ₴757.5B. If compared with the pre-war period, the reduction is 10 times as large. In 2022, corporate borrowing decreased by only 0.2% to ₴772.9B.
At the same time, a sharp increase (41%) in commercial savings on deposit was recorded last year, a ₴1.3T equivalent. In 2021, commercial deposits grew by only 18%, to ₴769B, and in 2022 - by 17%, to ₴907.6B.
Bankers note that such a large increase in cash accumulation is abn ormal. It is usual for a company to keep a small amount of money in its accounts. However, most of a company's funds are usually invested in its development and operations - raw materials, equipment, expanded production, increased inventories, etc.
At the moment, the businesses are not moving forward with expansion or development. Some fear military risks and have decided to sit back and wait.
Banker’s 2024 lending strategy for small and medium-sized businesses.
This year, new loans to small and medium-sized enterprises (SMEs) may make up to 70% of the total volume of loans issued by banks, predicts Globus Bank top manager Oksana Shulga. She believes that the share of state loans of the state programs Affordable Factoring 5-7-9 and Affordable Financial Leasing 5-7-9 will be about 50%. Targeted joint programs between banks and manufacturers will account for more than 45% of SME loans. However, the banker predicts the 5-7-9 lending program will be reduced. "The program's implementation will become more targeted with a vector on entrepreneurs in the economy sectors that have not yet recovered following the large-scale invasion and work in regions with high military risks," Shulga predicted. She added that reducing the NBU discount rate allows commercial banks to develop their own credit programs for conducting business activities. Moreover, with the further reduction of the discount rate to between 12% and 14%, interest rates on loans for SMEs may decrease by 2%-3% to 15%-17% per annum, increasing the popularity of such loans.
Within the framework of supporting micro, small, and medium-sized businesses in Ukraine, in 2023 the state issued 13,658 loans for ₴44.7B. The lending program allows businesses to take a loan under state guarantees, which cover up to 70% of the borrower's obligations.
The National Bank predicts that loans will become cheaper. After the discount rate’s reduction to 15% in December, loans in Ukraine are likely to
72 UKRAINE Country Report February 2024 www.intellinews.com