The third quarterly Banking Sector Review published
today suggests that in Q1 2017 positive trends in the banking system that had
emerged in previous periods were taking hold as macroeconomic stability was
Demand for banking services kept recovering. For the
first time since the
outbreak of the crisis, domestic
currency lending to households picked up. Excluding PrivatBank,
replaced retail loans in the P2P segment with on-balance-sheet
loans, the growth rate stood at 2.8%.
Interest rates continued to move lower: interest rates
on 12-month retail deposits decreased by 1.7 percentage points to 15.7%
per annum in hryvnia and by 1.0 percentage point to 4.6% per annum in
US dollars in the January through April period. The interest rate policy of state-owned
banks was a major driver behind the decline in interest rates on hryvnia deposits. Interest rates on US dollar-denominated
loans hit new record lows. This downward trend is expected to persist, underpinned by a 1
percentage point reduction in the key policy rate in April 2017.
In January- April 2017, six banks were resolved. As a result, concentration in the banking
sector has increased, with 20 largest banks accounting for 90.6% of the
banking sector's net assets. Overall, after two years of the banking sector
clean-up, the banking sector's
sustainability was restored: the share of financial institutions by assets in
the sector that are exposed to risks due to their failure to meet the
requirements set by the NBU does not exceed 1.5%.
In May 2017, the NBU began publishing data on
non-performing loans calculated under
new rules based on generally accepted
international standards. As a result of the full
recognition by banks, in particular by PrivatBank,
of real quality of loan portfolios, the average level of NPL has increased to
55.1% (excluding off-balance data).
The major risk facing the banking sector is low
operational efficiency of state-owned banks and the poor quality of their
assets. To mitigate this risk, it is necessary to speed up the pace of
reforming state-owned banks.
For greater detail, see The Banking Sector Review posted in the “Publications" section on the NBU’s website.
* Data on loans
published in the “Banking Sector Review” differ from the corresponding
data published in the “Monetary Statistics” subsection as they:
-contain data on loan that were
solvent as at the reporting date, unless otherwise indicated;
-they cover data provided by banks
excluding their branches operating abroad;
- comprise amounts placed with other
resident and non-resident banks;
-adjusted for loan loss provisions,
unless otherwise indicated;
- personal savings (deposit)
certificates are not reflected in these data, unless otherwise indicated;
- comprise information about
non-resident clients, while monetary statistics data comprise information only
about resident clients.