Page 84 - UKRRptDec23

8.1.2 Loans
Ukrainians have taken ₴29B worth of microloans and accumulated debt.In nine months of the current year, Ukrainians were issued six million microloans (MFI) worth ₴29.1B. This is more than in 2022 but 40% less than in the corresponding period in 2021, when citizens took out 10.8 million microloans for ₴48.4B, according to Opendatabot. At the same time, in the third quarter of the year, the average microloan amount increased to ₴4,985. This is the largest amount since the start of the full-scale invasion and almost 30% more than in the corresponding period in 2021. In addition, microloan debt is growing by 6% per quarter. Thus, as of the end of September, Ukrainian personal debt in MFIs reached ₴9.44 billion. Even though Ukrainians actively serviced their debts in 2022 and significantly reduced the total debt amount, it increased again by ₴1.4B this year. More than half of new debt - ₴757 million - arose in the first quarter of the year.
How will interest rates on loans and deposits change because of the increased bank income tax? The increase in the bank profit tax from 18% to 50% in 2023 and 25% in the following years may provoke an increase in loan rates by financial institutions and a decrease in deposit rates to ensure stable profitability in the new tax environment, said the President of the Association of Ukrainian Banks (AUB) Andriy Dubas. "I think that banks will analyze the current situation and build their business model, their activities to continue to be profitable," he said. Speaking about the association's position regarding the adopted law, he said, "In wartime conditions, the volume of taxes may increase, but, in our opinion, it is not very correct to tax the previous period." Dubas also noted that the association supports the introduction of additional taxation only for a limited period. Raiffeisen Bank Board Chairman Oleksandr Pisaruk emphasized that the law on increasing bank income tax was adopted without any discussion with banks. He added that it is discriminatory and has long-term negative consequences for the investment and business climate in Ukraine.
84 UKRAINE Country Report December 2023 www.intellinews.com