Ukraine's NBU updates Macroprudential Policy Strategy
MOSCOW. Jan 9 (Interfax) - The National Bank of Ukraine (NBU) has updated its Macroprudential Policy Strategy, in particular, focusing more on the need to maintain business continuity amid the crisis.
"The publication of the Strategy promotes transparency, comprehensibility and predictability of macroprudential policy for financial market participants and accordingly increases its effectiveness in achieving the main goal which is financial stability in Ukraine," Ukrainian media quoted a statement on the NBU's website as saying.
The strategy reflects the aftermath of the crisis for Ukraine's financial sector, new challenges facing macroprudential policy and the NBU's approaches to responding to these new challenges, he said.
Among other new aspects in the document, the NBU highlighted the need for banks to focus their lending programs on specific segments and categories of customers, which do not contravene the development of market lending, as the role of lending support programs launched by the government from 2020 will be declining in the current macroeconomic conditions.
In the document, the NBU also draws attention to the fact that the loan portfolio of the banking sector remains concentrated. The NBU estimates that in October 2024, the 20 largest groups of private companies controlled by common owners accounted for 42% of gross banking loans and 17% of net corporate banking loans (excluding loans extended to the group of companies in PrivatBank, which are linked to former shareholders and their affiliates, accounting for 21% of gross loans). The share of non-performing loans for these business groups reached around 35%.
"While loan portfolio concentration is generally declining over time, it is still unjustifiably high, posing excessive credit risks to the sector as a whole. The National Bank expects banks to diversify their loan portfolios and lend more intensively to SMEs," the updated strategy said.
Alongside, the NBU notes the significant impact of environmental, social and governance (ESG) risks on banks' activities.
"Additionally, the focus of the Strategy has been clarified, as one of the systemic risks mentioned in the previous document - the rapid growth of unsecured consumer lending - has weakened since its last update four years ago. Besides, given the crisis, plans for introducing and applying macroprudential instruments have been updated, in particular, the introduction of capital buffers has been postponed," the NBU said.
The updated Macroprudential Policy Strategy was endorsed by the NBU's board decision of December 24, 2024.
