Lending activity in Ukraine has emerged as a key engine of growth for the banking sector this year, with net business loans rising to 8.4% of gross domestic product (GDP) as lenders expanded their hryvnia portfolios for a third consecutive quarter, reported Ukraine Business News.

Banks reported broad-based growth across corporate and household lending in the third quarter of 2025, with state-owned lenders showing the strongest expansion. Net commercial loans reached 8.4% of GDP, while household borrowing accounted for 3.2%, reflecting a steady recovery in credit penetration after the disruption caused by the full-scale Russian invasion.

The fastest gains were recorded in long-term loans for capital investment, whose share exceeded 25% of total lending for the first time. Credit demand was driven largely by market-based loans rather than subsidised programmes, as the share of state-supported lending in the hryvnia corporate portfolio fell to 27.4%. Nevertheless, government support facilitated the issuance of UAH5bn ($120mn) in loans to defence-industrial enterprises.

Household borrowing remains dominated by unsecured loans, though mortgage lending picked up, rising to 13.4% of total consumer credit. Market interest rates eased from a July peak of 16% to 15.3% in September, supporting the rise in demand.

The banking sector earned 39.9bn hryvnias ($955mn) in profits in the third quarter, with interest income—now accounting for 47.8% of total revenue—remaining the main profit driver.

For 2025, Ukraine’s banks remained solidly profitable, continuing a strong trend established since the outbreak of the war in 2022. The National Bank of Ukraine said the sector’s resilience has been underpinned by high interest income, prudent lending, and robust performance by state-owned institutions. Lower provisioning needs and tight cost controls also contributed to earnings.

Analysts expect profitability to soften in 2026 as interest margins narrow and funding costs rise. The outlook will depend on macroeconomic stability, reconstruction financing and regulatory changes linked to Ukraine’s EU accession efforts. Even so, the sector is projected to remain in profit, supported by continued central bank measures and gradually expanding private-sector credit.