Fitch Ratings improved the stability rating of Ukraine’s state-owned Oschadbank and Ukrgasbank, Ukraine Business News reported on July 6.

The stability ratings for both Oschadbank and Ukrgasbank shifted from CC to CCC-. Moreover, Fitch maintained the long-term issuer default ratings for these banks in foreign and national currencies at ССС- and ССС respectively.

"The increase in stability rating reflects our view of a moderately lower bankruptcy risk for Oschadbank and Ukrgasbank due to more stable asset quality and profitability due to a less rigid operating environment than we previously expected," Fitch noted.

However, the government support rating (GSR) dropped from CCC- to no support.

Ukraine’s banking sector is back on track after the initial war shock. Solvent banks earned UAH34bn ($926mn) in net profit in Q1 2023, a far cry from the UAH153mn in losses during the same period last year, Oschadbank’s CEO Sergii Naumov told bne IntelliNews in an exclusive interview.

The majority of Ukraine’s bankers have a positive outlook for the sector, according to a survey conducted by the National Bank of Ukraine (NBU) in May. The majority of top managers in banks and non-bank financial institutions have reported an improvement in the state of the financial sector over the past six months, according to the NBU.

This marks a significant shift from the previous survey conducted in November 2022, where only 3% of respondents expressed optimism. The survey also revealed that the percentage of respondents expecting a deterioration in the financial sector in the next six months has decreased significantly, from 51% to just 3%.

At the same time, non-performing loans (NPLs) in Ukraine’s banking sector decreased by UAH7bn ($190mn) in one month. On June 1, NPLs were at 39.1%, down from 39.3% at the start of May, reaching the same level as January 1, according to the NBU.