Ukrainian bank lending portfolios contracted 1% in 2023, while deposits increased 26.4% - NBU

MOSCOW. Jan 11 (Interfax) - The total lending portfolio of the Ukrainian banking sector at the close of 2023 totaled 997.7 billion hryvnia, which is 1% less than it was at the beginning of the year, Ukrainian media reported, citing statistics from the National Bank of Ukraine (NBU).

NBU statistics show that lending portfolio growth, which had resumed at a slow pace in July, slowed to 0.2% in December from 1.6% in November.

The result of the last month of 2023 was ensured mainly by an increase in demand for foreign currency loans from the corporate sector. Business loans in foreign currency increased 2.4% to an equivalent of UAH 241 billion, while hryvnia loans were up just 0.1% to UAH 516.4 billion.

For the whole year, hryvnia loans to businesses decreased 0.7%, while foreign currency loans dropped 4.6% in hryvnia equivalent or 8.2% in U.S. dollar equivalent to $6.35 billion.

Retail lending decreased 2% in December to UAH 209.8 billion, while foreign currency loans were down 2.8% to UAH 11.9 billion in hryvna equivalent. However, over the past year, retail lending in local currency increased 6.6% in total, while foreign currency lending to individuals decreased 11.7% to $0.32 billion.

NBU data show that interest rates on new hryvnia loans to individuals increased from 33.4% to 33.7% in December, and rose on foreign currency loans from 4% to 6.4%. Hryvnia loan rates to businesses fell from 17.7% to 17.5% in December, while foreign currency loan rates dropped from 7% to 6.4%. Interbank lending rates decreased for the sixth straight month in December, by 0.2 percentage points to 15.0% per annum, while overnight rates remained at the November level of 14.9% per annum.

Deposits by Ukrainian residents in banks in 2023 increased 26.4% to UAH 2.393 trillion, including a 16.5% increase from individuals to UAH 1.805 trillion, and 41% from the corporate sector to UAH 1.279 trillion. Household deposits in local currency increased 20.2% to UAH 712.2 billion, while their foreign currency deposits rose 10.1% in hryvnia equivalent and 6% in dollar terms to $9.67 billion. Businesses increased hryvnia deposits 49.9% to UAH 916.2 billion, and foreign currency deposits by 22.8% in hryvnia equivalent and 18.2% in dollars, to $11.97 billion.

The volume of deposits made in December increased 7.6%: legal entities increased deposits 10.7%, and retail deposits increased 4.9%. Hryvnia deposits made by businesses increased 12.2%, while foreign currency deposits rose 7.1%. Household deposits rose 4.5% in hryvnia and 5.6% in foreign currencies.

The average rate for new hryvnia deposits from the corporate sector in December remained at the November level of 10.3% after four consecutive months of decline, while for households it dropped from 11.9% in October-November to 11.7% per annum. At the same time, the rate of foreign currency deposits for legal entities decreased 0.1 percentage points to 0.5% per annum, returning to the October level. For individuals, the rate remained unchanged at approximately 1.0% per annum.

As reported, the NBU lowered its discount rate 1 percentage point as of December 15 from 16% to 15% per annum, while rates for placing overnight certificates of deposit fell to 15%, three-month certificates of deposit went to 19%, for loan refinancing loans to 21%.

The official exchange rate as of January 11 is 38.19 UAH/$1.