The National Bank of Ukraine reported that the Financial Stability Council (FSC) reviewed systemic risks to Ukraine’s financial sector, concluding that economic and financial conditions remain under control despite heightened geopolitical uncertainty. The FSC discussion also flagged the growing presence of virtual assets as a new financial stability challenge and set work in motion on possible regulatory arrangements. Inflation accelerated in early 2025, but the drivers of the increase were described as fading, with the National Bank of Ukraine’s recent key policy rate hike expected to help curb price pressures. The FSC noted the National Bank of Ukraine’s January forecast for GDP growth to accelerate to 3.6% in 2025 and to about 4% in subsequent years, while highlighting elevated war-related and external risks. In the banking sector, deposit inflows were stable and predominantly hryvnia-funded, liquidity ratios exceeded minimum requirements by more than three times, net corporate loans increased 26.5% year on year in February, and retail lending continued to expand, with mortgage growth occurring only under the eOselia state programme. Asset quality improved as the non-performing loan ratio declined by 6.3 percentage points over the year to 30.5% at end-January, and the sector was described as well capitalised relative to minimum requirements. On next steps, the FSC agreed to conduct an in-depth study on virtual asset regulation, including a regulatory model to be jointly prepared by the National Bank of Ukraine and the National Securities and Stock Market Commission, following the Commission’s presentation on how supervisory powers could be allocated. Separately, the National Bank of Ukraine said it will decide the timeline for capital requirement enhancements after completing its ongoing assessment of banks’ resilience.

Original source View in tracker