The National Bank of Ukraine published its Q4 2024 Banking Sector Review, reporting continued growth in net hryvnia lending to businesses and households alongside rising investment in domestic government bonds. The review indicates the sector remained profitable and broadly well capitalised to meet regulatory requirements, even after the retroactive accrual of a higher income tax charge. Banks’ net assets increased 16.2% in 2024, driven by a more than one-third year-on-year rise in government bond holdings, while investments in the National Bank of Ukraine’s certificates of deposit declined 11.6% year-on-year. Net hryvnia business lending rose 20.6% in 2024, with SME loans up 22.1% and reaching 60.2% of the net hryvnia corporate portfolio; lending grew fastest at state-owned banks, up 24.8% over the year. Household lending rose 39.9% year-on-year in Q4, while mortgage growth slowed to 7% quarter-on-quarter, remaining concentrated in the eOselia state programme with a gross portfolio of UAH 24.1 billion. Asset quality improved, with the non-performing loan ratio falling to 30.3% (18.6% excluding PrivatBank former owners’ and legacy pre-2014–2016 crisis debts). Preliminary 2024 profit totalled UAH 103.7 billion, but Q4 recorded a UAH 13.5 billion loss due to the retroactive accrual of the increased 50% income tax, with some banks, including four systemically important institutions, yet to fully reflect the tax in their accounts. Regulatory capital adequacy was about 17% as of 1 January 2025, although additional tax recognition could push some banks below required ratios. A resilience assessment began at the start of 2025; depending on the results, banks may need to prepare and implement capitalization or restructuring programmes by the end of the year, and a schedule will be developed for introducing new regulatory capital requirements.
National Bank of Ukraine 2025-02-20
National Bank of Ukraine banking sector review shows 2024 lending growth and high capital despite retroactive 50% income tax
The National Bank of Ukraine's Q4 2024 Banking Sector Review highlights growth in net hryvnia lending and increased investment in domestic government bonds, with the sector remaining profitable and well-capitalized despite a higher income tax charge. Banks' net assets rose 16.2% in 2024, driven by a significant increase in government bond holdings, while household lending surged 39.9% year-on-year in Q4. A resilience assessment in early 2025 may require banks to implement capitalization or restructuring programs based on the results.