In 2017 Banks Restored Household Lending and Reduced the Share of Non-Performing Loans: Banking Sector Review
In 2017, the banking sector
improved, i.e. after more than a three-year crisis almost all
key banking indicators showed a positive trend. Banks
enhanced household lending and were issuing new business loans according to the
sixth quarterly Banking
Sector Review released by the National Bank of Ukraine.
In 2017, household lending increased
substantially, i.e. net hryvnia loans increased by 42%
PrivatBank and private banks accounted for the
highest lending rates. Consumer lending is reputed to be the increase driver.
In H2, banks accelerated new loans
disbursement to businesses. In 2017, foreign and state-owned banks generated
the largest increases in net hryvnia corporate loans by +17.5% and +12.8%
respectively. Key corporate borrowers mainly responsible for corporate lending
growth were government monopolies, trade and agricultural companies. Rates on
corporate hryvnia loans and loans to households remained largely unchanged.
Fostered issue of new loans had a
positive impact on banks’ loan portfolio. The percentage of non-performing
loans declined by 3.2 pp to 54.5% in H2.
In 2018 the
NBU expects continued surge in consumer lending, as well as recovery of
business lending in hryvnia.
Customer inflows to the banking
system persist
In 2017, hryvnia household deposits
grew by 22.4%, while foreign currency ones remained flat. PrivatBank
and Oschadbank generated the largest growth in
hryvnia and foreign currency household loans respectively.
Hryvnia corporate loans grew by
13.6% in 2017. Foreign currency corporate deposits declined by 10% in the US
dollar equivalent.
Despite the decline in interest rate
throughout the year, the funding base remains stable. All in
all in 2017, the structure of liabilities was noted for a spike in
corporate and household deposits by 2.1 pp to 77.1%.
Costs of deposits in 2017
substantially decreased
Generally in 2017, interest rates on
hryvnia deposits decreased by 3.2 pp to 14.3% per annum (on annual deposits).
At the same time, after the NBU
gradually increased the key policy rate to 16%, costs of short-term deposits in
hryvnia (up to 6 months) rose by 0.2-0.4 pp compared to October 2017, when the
key policy rate was scaled up for the first time.
Rates on household foreign currency
deposits have remained at an all-time low of 3.7% per annum (annual deposits).
The number of banks exhibiting profitability
rose
In the last year, unprofitable banks
declined from 33 to 18 in 2016. According to the NBU
projections, in 2017, operating income in the sector advanced by 10% per annum.
However, due to increased
provisioning the banking sector closed the year with losses of UAH 24.4 billion mostly on account of four major banks, such as PrivatBank.
Final financial statements
indicators of banks for 2017 may be adjusted following
the results of the annual audit before late April.
For greater detail,
see The Banking Sector Review posted in the Publications section on the NBU’s website.
Data on loans and deposits published
in the "Banking Sector Review" differ from the corresponding data published in the "Monetary Statistics" since the former details:
-
data on banks solvent
as at the reporting date, unless otherwise specified;
-
data furnished by
banks, as well as branches operating abroad;
-
funds deposited with
other resident and non-resident banks;
-
exposures adjusted
for loan loss provisions, unless otherwise specified;
-
data on personal
certificates of deposit, unless otherwise specified; and
-
information on non-resident customers.
