Page 85 - UKRRptDec23

For the first time since the third quarter of 2022, Ukraine’s banks increased their net hryvnia portfolio of business loans in the third quarter of 2023, and the increase in consumer loans continued for the second quarter in a row, the National Bank of Ukraine (NBU) said in the review of the banking sector for the third quarter of 2023 .
According to the report, the net hryvnia corporate loan portfolio grew for the fourth month in a row in October after a decline caused by Russia’s full-scale invasion almost two years ago. The share of small and medium-sized enterprises in this portfolio increased to 55%.
The volumes of the net retail hryvnia credit portfolio continued to grow primarily thanks to the recovery of card lending. Also, in the third quarter, the volume of net mortgage loans increased by 18.7% due to the issuance of loans under the "eOselya" program that has breathed some life back into Ukraine’s mortgage market.
“Banks experienced almost no credit losses for the third quarter in a row. The share of non-performing loans decreased due to the write-off of such loans to individuals and the reclassification of certain large corporate loans as non-performing loans,” the NBU said.
Retail deposits remains the main source of funding for the mortgage business and has been growing for the fourth quarter in a row. The still attractive deposit rates contributed to the further growth of time deposits of the population in hryvnia, although at an increasingly lower rate after the NBU began to ease its monetary policy thanks to falling inflation.
“Despite the reduction in the discount rate, higher rates on three-month deposit certificates of the National Bank and increased reserve requirements for current funds continued to motivate banks to attract time deposits from the population. Therefore, the reduction of deposit rates due to the reduction of the discount rate occurred slowly,” the NBU said.
Banks' operational efficiency remains high and provisioning costs minimal, so the sector continued to grow profits. Only seven, mostly small, banks were unprofitable for the quarter (15 in the previous quarter), the NBU reports.
Ukraine's banking sector has issued 589 of affordable loans to entrepreneurs worth UAH2.4bn in loans under the government's Affordable Loans 5-7-9% program in the second week of November.
Since the beginning of the year, banks have collectively issued a remarkable 22,400 business loans, amounting to UAH82bn in financial assistance.
Leading the charge is the state-owned PrivatBank, which has played a pivotal role in providing small and medium-sized businesses with UAH33.3bn in loans. State-owned banks have also exhibited impressive growth rates in extending credit support to small businesses.
Notably, PrivatBank has ambitious plans to nearly double its lending volume over the next two years. This proactive approach aligns with the current focus of Ukrainian businesses on expansion and increased production, which holds significant importance for the overall economic recovery.
PrivatBank board member Yevhen Zaigraev emphasized the bank's commitment to meeting the heightened demand for fixed asset lending, underlining its role in fostering economic resurgence.
To date, 45 banks have actively participated in the Affordable Loans 5-7-9% program, facilitating access to financing for businesses across Ukraine. Alongside PrivatBank, Oschadbank has issued a substantial number of loans
85 UKRAINE Country Report December 2023 www.intellinews.com