Ukraine’s banking sector back in profit – just

Ukraine’s banking sector back in profit – just
Ukraine's banking sector had a good first two months of this year, but booked big losses after the war started. However, as the fighting became concentrated in Donbas and the south in April the sector began to return to normal and booked strong profits in July. / bne IntelliNews
By Ben Aris in Berlin September 4, 2022

Ukraine’s banking sector was back in profit for the year in July, but only just, earning a cumulative UAH3.4bn ($91.98mn) in the year to date, according to the latest data from the National Bank of Ukraine (NBU). (chart)

This year should have been a good year, with banks earning more profits in the first two months than they did a year previously, putting in their second year of strong growth as the economy finally emerged from the recession caused by the 2014 Revolution of Dignity.

However, the start of the war at the end of February brought banking activity to a halt and the bank sector recorded deep losses in March and April. (chart)

Russia introduced its Phase 2 of the war in April and withdrew its forces from the north of the country to focus its efforts in the Donbas region. That allowed the rest of the country to start to go back to work. The reduction in tension was immediately apparent in the banking sector, which returned to strong profits on a par with the last two years in May of UAH6.1bn. June saw a setback with losses of UAH3.3bn, but July was very strong with a rebound to UAH8bn, only slightly behind July in 2021, the best month in the sector for more than five years.

The strong first two months of this year meant that the profits earned in July were enough to put the cumulative earnings of the banking sector back into the black for the first seven months of this year.

The central bank has not released all the data covering the sector and the last results for the returns on assets and equity were reported in April, when both were around zero, but should have improved in the meantime. (chart)

Lending has resumed and while corporate loans have fallen steadily since the start of this year, when tensions rose dramatically, retail borrowing has jumped dramatically in the last two months as the population took out loans to tide them over the instability of the first months of the war. Loans to corporates totalled UAH900bn ($24.3bn) in July, while those to individuals were up at UAH250bn ($6.8bn). (chart)

Despite the war the banking sector remains stable. Non-performing loans have ticked up in the last few months to reach 35.3% of the loan book for corporates and a reasonable 18.2% for individuals. But remarkably compared to previous years, the overall level of NPLs remains down. (chart)

The total ratio of NPLs for the sector was 30% in July, against 37.2% in July 2021 and 48.5% in the same month in 2020. Drilling into the subsectors, state-owned banks remain the most exposed to NPLs with a ratio of 45.2% and of the state-owned banks PrivatBank accounts for the lion’s share with 67.1%, although that is down from the 71.4% it reported in the same month a year earlier. The foreign-owned banks are in the best health with 11.8%, followed by Ukraine’s privately owned banks with 14.6%.

NPLs % of loan book


Jul 20

Jul 21

Jul 22

ratio of non-performing loans, %




incl. banks:


with state participation, of which:








state banks ex-PrivatBank




Foreign owned




Privately owned








Source: NBU


Nevertheless, cut off from any source of funding and with business greatly reduced by the war, banks have been digging into their capital to fund their operations. The NBU has not updated its capital adequacy ratio numbers since the war started but these had fallen from the mid20s to 18% as of February – still well ahead of the mandatory 10%. But if the capital adequacy ratio continues to decline, at some point the central bank or owners will be forced to recapitalise the banks. (chart)



This article is from bne IntelliNews Ukraine monthly country report. Sign up to receive the report to your inbox each month, which covers the slow moving macro- and micro-economic trends, the major political news and a round-up of the main sectors and corporate news. First month is free and you can unsubscribe at any time.

See a sample here.

Subscribe here (first month is free and you can unsubscribe at any time)

Or email for more information or to ask for a trial

The report covers:

  • macroeconomic trends and the real sector
  • banking and finance
  • public and external sector
  • sector and leading corporate news