The National Bank of Ukraine published its Q3 2025 Banking Sector Review, highlighting rapid growth in hryvnia lending as the main driver of banking sector asset growth for a third consecutive quarter, alongside improving portfolio quality and easing loan rates. The review also signals upcoming supervisory policy decisions on the timing for activating capital buffers and a planned review of the approach to maximum large exposure per counterparty. Loan penetration to GDP has been accelerating for three quarters, with net corporate loans at 8.4% of GDP and retail loans at 3.2%. Corporate lending expanded across private companies and some state-owned enterprises, particularly in trade, financial services, machine building, agriculture, energy, and food, with the fastest portfolio growth at state-owned banks; long-term corporate loans exceeded 25% of the net hryvnia corporate portfolio. Growth was mainly outside state support schemes, reducing subsidized loans to 27.4% of the hryvnia corporate portfolio, while defense-industry loans under state support reached about UAH 5 billion; unsecured lending dominated retail portfolios, and mortgages rose to 13.4% of retail loans. Asset allocation shifted toward domestic government securities as holdings increased for the first time since the start of the year, while certificates of deposit declined; liabilities grew mainly on retail deposits, with term deposits at 33.9% and retail deposit dollarization down to 33.6%. The non-performing loan ratio fell to 25% (14.3% excluding legacy state-owned bank NPLs from the 2015–2017 reform), Q3 profit totaled UAH 39.9 billion, and market rates on hryvnia business loans eased from 16% in July to 15.3% in September. The NBU intends to determine by year-end the timeline for activating the capital conservation buffer and the systemic importance buffer, and to review by year-end its approach to assessing the maximum large exposure per counterparty (LEX). The review also notes that a proposed increased profit tax rate of 50% in 2026, if adopted, may challenge the sector by weighing on sustainability, lending activity, investment attractiveness, and state-owned bank privatization prospects.
National Bank of Ukraine 2025-11-17
National Bank of Ukraine reports Q3 2025 lending-led bank performance and flags year-end decisions on capital buffers and large exposure limits
The National Bank of Ukraine's Q3 2025 Banking Sector Review highlights rapid growth in hryvnia lending as the primary driver of asset growth, improved portfolio quality, and eased loan rates. It anticipates supervisory policy decisions on capital buffers and large exposure limits, while noting potential challenges from a proposed 50% profit tax rate in 2026. Corporate lending expanded significantly, particularly in state-owned banks, with a shift towards domestic government securities and a decrease in non-performing loans.