The National Bank of Ukraine published its Financial Stability Report, describing banks as playing a larger role in supporting the economy through expanding lending and investment in infrastructure while keeping risk control and operational continuity in focus. The report also sets out supervisory follow-through from the 2026 banking resilience assessment, including higher capital adequacy requirements for a subset of banks and a phased move to capital buffers and other EU-aligned capital rules from 2027. Macroeconomic conditions are presented as favourable in the second half of the year, but the energy deficit and risks of erratic external financing are weighing on activity and expectations. Liquidity remains high, although the share of high-quality liquid assets has declined to about one third of banks’ assets, and liquidity management is expected to rely more on banks’ Internal Liquidity Adequacy Assessment Process (ILAAP). Business lending continues to rise, with SME loans still the core of portfolios, stronger demand for investment loans from large businesses, and a growing share of lending to state-owned enterprises that the report says will need ongoing management; unsecured retail lending remains most attractive, while a mortgage compensation model planned for 2026 is expected to increase banks’ interest in housing finance. Profitability is supported by high net interest margins, but increased operating spending and a planned bank income tax rate of 50% in 2026 are flagged as constraints on further balance sheet growth and a potential complication for privatising state-owned banks. The resilience assessment included adverse-scenario stress testing for the first time since the start of the full-scale war, resulting in higher capital adequacy requirements for nine banks representing 18% of sector assets, with compliance due by October 2026. Banks are required to meet capital buffer requirements from the start of 2027, while a methodology for higher individual Pillar II capital requirements is being developed for introduction from 2027 and the minimum regulatory capital ratio requirement is set to decline to 8% from 10% in line with EU practice. The report also notes continued transformation in the non-bank sector, citing insurance market clean-up, rising assets and premiums, and ongoing development of war-risk insurance products alongside work on a longer-term systemic model.
National Bank of Ukraine 2025-12-18
National Bank of Ukraine raises capital requirements for nine banks and sets 2027 start for capital buffers and EU-aligned ratios
The National Bank of Ukraine's Financial Stability Report emphasizes banks' growing economic support via increased lending and infrastructure investment, while maintaining risk control. It details supervisory measures post-2026 banking resilience assessment, including higher capital requirements for some banks and a phased transition to EU-aligned capital rules by 2027. Despite favorable macroeconomic conditions, challenges like energy deficits and external financing risks persist, with liquidity management increasingly reliant on banks' Internal Liquidity Adequacy Assessment Process.