The National Bank of Ukraine published its Q1 2025 Banking Sector Review, reporting that bank lending growth accelerated and supported sector assets during the quarter while investments in securities and certificates of deposit edged lower. The review points to continued resilience supported by capital buffers and profitability, with sustained earnings expected to underpin further loan growth. Net hryvnia corporate loans rose 9.5% quarter on quarter and 28.4% year on year, with growth across all bank groups and increases in lending to farmers, wholesale traders, construction companies, and machine-building enterprises. The share of subsidized loans under the Affordable Loans 5–7–9% program fell to 31.2% of the net corporate portfolio of performing loans, amid stronger unsubsidized lending and overdue interest compensation payments to banks, with the review noting the program needs further improvement through refocusing support on investment projects and higher-risk regions. Net hryvnia household lending increased 6.7% quarter on quarter and 35.9% year on year, led by unsecured loans, while mortgage growth slowed for a third straight quarter due to restructuring-related delays in the eOselia state program. Asset quality improved as the corporate default share on hryvnia loans fell to about 3% and the non-performing loan ratio declined to 28.6% (17.1% excluding legacy debts at state-owned banks and debts owed by former owners of CB PrivatBank JSC), with the updated EU-aligned NPL methodology having no material impact. Banks recorded UAH 40 billion in Q1 profit (65.7% from state-owned banks), while the capital adequacy ratio was about 16% as of 1 April. Stress testing is due to commence in June, and banks assigned higher capital adequacy ratios based on results will submit capitalization programs and implement them by year-end. The NBU also flagged that, after the test-mode period ends, banks will be required to comply with a leverage ratio aligned with EU standards.

Original source View in tracker