The National Bank of Ukraine published its Financial Stability Report, describing banking conditions as favorable in H1 2025 with capital adequacy, liquidity, profitability and loan quality at historical highs. Against this backdrop, banks are expanding lending to businesses and households, competing for creditworthy borrowers and easing lending conditions while keeping lending standards prudent. In April, the annual growth rates of the net portfolio of hryvnia loans reached 34% for households and 29% for businesses, lifting the loans-to-GDP ratio. Subsidized loans account for less than one-third of hryvnia loans to businesses, while state-supported mortgages represent over 95% of the mortgage segment; the report notes that scaling up mortgages will require greater use of banks’ available liquidity and infrastructure changes to be reflected in a Mortgage Development Strategy. Deposit rates have risen following key policy rate hikes in late 2024 and changes to the monetary policy operational framework, while banks’ net interest margins have edged lower; as inflationary pressures ease, market rates are expected to decline, increasing pressure on margins. Operational risk losses remain high but have declined compared with the first years of the full-scale invasion, allowing the NBU to adjust operational risk capital calculations in line with the EU approach, which would free up some capital; the report also flags uncertainty from repeated retroactive application of the higher income tax rate. The annual resilience assessment is ongoing, with the asset quality review confirming banks’ overall credit risk assessments and stress testing underway; banks required to meet higher capital adequacy ratios would need to implement capitalization or restructuring programs by year-end. The assessment is also intended to support an optimal schedule for implementing capital buffers, which the NBU plans to approve before the end of the year, alongside further EU acquis alignment including leverage ratio requirements, new credit risk coverage requirements, settlement risk components and credit valuation adjustments. The NBU expects to move closer to starting a formal European Commission equivalence assessment process within a year.
National Bank of Ukraine 2025-06-17
National Bank of Ukraine Financial Stability Report shows rapid hryvnia loan growth and signals EU-aligned capital changes
The National Bank of Ukraine's Financial Stability Report highlights favorable banking conditions in H1 2025, with historical highs in capital adequacy, liquidity, profitability, and loan quality. Banks are expanding lending, with hryvnia loan growth rates at 34% for households and 29% for businesses, while deposit rates have risen following policy rate hikes. The report also notes resilience assessments and plans for EU acquis alignment, including capital buffers and leverage ratio requirements.