Ukraine's banking sector to have another strong year

Ukraine's banking sector to have another strong year
Ukraine's banks had their most profitable year since before the pandemic in 2023 and have got off to another strong start this year. / bne IntelliNews
By Ben Aris in Berlin April 1, 2024

Ukraine’s banking sector had a strong year in 2023, ending with a cumulative UAH85.5bn profit, despite taking a UAH44bn hit in December when the banks were forced to pay a 50% one-off tax on profits.

And the sector is on course to have the same strong year in 2024, earning UAH16.8bn in January (chart), ahead of last year’s UAH14.9bn in the same month, and UAH9.1bn in February, giving a cumulative total for the first two months of the year of UAH25.9bn, ahead of the UAH21.5bn in the first two months of last year. (chart)

The tax burden on bank profits is a more moderate 25% this year, which is still higher than pre-war.

 

Non-performing loans (NPLs) have improved as well, with a sharp drop in retail NPLs and a stabilisation in corporate bad debt. Overall, NPLs are 36.7% for the sector as whole, as the quality of the loan portfolio continues to improve.

NPLs % of loan book
 

Feb 23

Feb 24

ratio of non-performing loans, %

38.24

36.75

incl. banks:

    

with state participation, of which:

51.93

49.42

PrivatBank

67.48

59.96

state banks ex-PrivatBank

40.42

41.73

Foreign owned

20.46

16

Privately owned

23.75

15.87

Insolvent

0

0

Source: NBU

PrivatBank continues to be the black sheep of the flock, but there too, NPLs have fallen from around 90% when the bank was nationalised in 2016 to under 50% for the first time in February. Foreign-owned and privately owned banks have NPLs of 16% and are the best performing in the sector.

Both consumer and corporate loans are starting to rise again after plummeting after the start of the war, with consumer loans rising faster than corporate loans. (chart) And banking assets in general continue their strong growth. (chart)

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Data

Polish CPI picks up growth to 2.4% y/y in April, flash estimate shows

Polish CPI grew 2.4% year on year in April (chart), just below the consensus line of 2.5% y/y and 0.4pp above the March reading, a flash estimate from Poland’s statistical office GUS showed on April 30.

Preliminary Q1 GDP data shows Hungarian economy posts modest rebound

GDP grew 1.1% year on year in Q1 and by 1.7% when adjusted for calendar effects.

Russia’s Economic Ministry issues bleak economic stress test scenario

Russia's Finance Ministry ran an extreme stress test on the economy for this year that assumes zero growth, a weakening ruble and falling oil and gas revenues in the worst-case scenario.

Moldova’s industrial output shows signs of recovery in February

More abundant and cheaper gas this year creates opportunity for resumption of industrial activity in Moldova.

Russia’s CBR maintains key rate at 16%

The board of the Central Bank of Russia (CBR) resolved to keep the key interest rate unchanged at 16% at the policy meeting on April 26, making a third meeting in a row that the rate is maintained flat.

Polish CPI picks up growth to 2.4% y/y in April, flash estimate shows
22 hours ago
Preliminary Q1 GDP data shows Hungarian economy posts modest rebound
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Russia’s Economic Ministry issues bleak economic stress test scenario
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