Ukraine's National Bank adjusts outlook of banks' losses from 20% up to 30% of portfolio

MOSCOW. Dec 27 (Interfax) - The National Bank of Ukraine (NBU) has adjusted its forecast of losses that Ukrainian banks would generate from 20% up to 30% of their portfolio in 2022, the NBU said in its Financial Stability Report published on Monday.

Due to limited export options and damage caused to the energy infrastructure, the aggregate losses of the banks' loan portfolios risk growing to 30%, Ukrainian media reported citing the document.

The banks have already lost 9% of their loan portfolios, primarily resulting from acknowledging loans as nonperforming, it said.

Additionally, 14% of the portfolios will experience considerable problems with servicing loans if the current terms and conditions remain unchanged, it said.

NBU First Deputy Governor Yekaterina Rozhkova said loans were issued in 2022 almost exclusively under the Affordable Loans 5-7-9 program. In particular, its share in the net hryvnia corporate portfolio reached 26%.

The NBU also reaffirmed in its report that the net stable funding ratio (NSFR) of 100% will be introduced starting April 1, 2023.

It also affirmed the schedule of deductions of non-core assets from capital at 75% starting December 31, 2022.

The NBU recommended that the banks impartially assess portfolio quality, acknowledge credit risks, and pay closer attention to liquidity risk management, as well as ensure the uninterrupted operations of banking outlets amid blackouts.

Rozhkova said the NBU intends to start assessing asset quality in the second quarter of 2023.

As reported earlier, to minimize negative effects of the crisis on the Ukrainian financial system and uphold its stable performance, the NBU decided in March not to conduct an annual assessment of the banks' resilience in 2022 and postpone the raising of the NSFR to 100% from 90% for a year until April 1, 2023.