Ukraine’s banks continue to show resilience in war-time conditions, posting healthy profits for 2024 and the first four months of 2025 while continuing to reduce their holdings of non-performing loans (NPLs).

Profits

The banking sector reported cumulative profits of UAH 90bn ($2.2bn) in 2024, a slight increase on the UAH 86.5bn reported for 2023.

From January to April 2025, Ukrainian banks generated UAH 52.9bn in profits, almost exactly matching the equivalent figure from last year.

A significant contributor to the banks’ performance over the course of the war has been the ready availability of Ukraine’s domestic government bonds (OVDPs) at highly favourable interest rates.

Between the start of the war and 30 April 2025, the Ukrainian government has raised UAH 1,175,591bn (€2.65bn) through primary auctions of government debt.

For the cash-strapped government, being able to tap the liquidity in the domestic banking sector has become an important source of funding, albeit insufficient to meet all the government’s needs. Ukraine’s banks have invested heavily in these instruments because of the extremely attractive interest rates, with the maximum yield on UAH-denominated bonds set at 16.5%, which have become a major source of income, and risk-free to boot, for the banking sector.

As of December 2024, banks including the National Bank of Ukraine, were the largest holders of this debt, accounting for 47.8% of the total.  

President Zelensky’s administration has sought to claw back some of the profits made by the banks, signing a law introducing a 50% tax rate on banks' profits generated in 2024, increasing it from 25%.

Those tax payments are clearly visible in the chart where profits of the sector plunge every November when the elevated tax payments become due each year for the last two years. This year is unlikely to be any different.

Experts have warned that the banks’ financing of government debt may not be sustainable in the long term. Nearly all funds raised in 2024 have gone to servicing or repaying debt, raising concerns of a potential “debt avalanche” scenario, in which the proceeds from debt sales are used entirely to pay off old obligations.

NPLs

Ukraine’s banks have also continued the downward trend in NPLs. In May 2025 the proportion of NPLs was at 28.3%, down from 35.52% in May 2024.

Amongst state-owned banks, which account for around half of all banking assets in Ukraine, the ratio of NPLs was at 40.93% in May 2025, down from 48.47% a year ago.

PrivatBank continues to represent the lion’s share of bad debt, but has still seen levels fall over the past year from 58.68% in May 2024 to 51.35% in May 2025.

NPLs % of loan book
	May 23	May 24	May 25
ratio of non-performing loans, %	39.29	35.52	28.3
incl. banks:
with state participation, of which:	53.21	48.47	40.93
PrivatBank	67.14	58.68	51.35
state banks ex-PrivatBank	42.5	41.02	33.72
Foreign owned	21.79	15.04	10
Privately owned	22.44	14.57	10.07
Insolvent	0	0	0
Source: NBU

Lending

Lending is growing across all segments. Net UAH loans have risen for 18 consecutive months, with corporate lending up 22.9% y/y and retail loans over 30% y/y. SMEs account for 60% of business loans. Demand for credit is at its highest since 2021, driven by activity in agriculture, wholesale trade, and industry. Competition among banks—particularly in unsecured consumer loans—is intensifying, and mortgage lending remains dependent on the state-run eOselia program.