Share of non-performing loans in Ukrainian banks rises to 40%
The NBU building in Kyiv (Photo:Press center of the NBU)
By Jan. 1, 2023, the share of non-performing loans in Ukrainian banks has increased to 38%, largely due to Russia's full-scale invasion of Ukraine, the National Bank of Ukraine (NBU) reported on Feb. 8.
In specific figures, the volume of non-performing loans increased by UAH 87 billion ($2.4 billion) over the last year, to UAH 432 billion ($11.8 billion).
The NBU noted that Russia’s full-scale invasion has reversed the steady trend of a gradual decrease in the share of non-performing loans (NPL) in Ukrainian banks, which has continued since 2018. During this time, the volume of NPL decreased by almost UAH 300 billion ($8.2 billion), and their share in the loan portfolio decreased from 55% to 27%, as of March 1, 2022.
“The consequences of the war like the destruction of assets and collateral, loss of income and deterioration in the solvency of borrowers reduce their ability to service loans, worsen the quality of banks' loan portfolios, and cause an increased drain on (bank) reserves,” the report said.
Potential irrecoverable losses to the loan portfolios of Ukrainian banks could reach 30%.
On Jan. 8, the NBU announced that they will conduct stress testing of the country’s banking system in the near future.
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