Ukrainian banks cut share of NPL in loan portfolio to 37.9% in 2023

MOSCOW. Feb 8 (Interfax) - The share of non-performing loans (NPL) in Ukraine's banking sector totaled 37.9% as on January 1, 2024, having dipped 0.8 percentage points over the past year, Ukrainian media reported, citing the statement from the National Bank of Ukraine (NBU).

The volume of NPL declined by UAH 9.7 billion to UAH 422.4 billion, and the number of banks decreased from 67 to 63.

The NBU said that the share of NPL remains rather high, and a significant reason for this is the military actions in the country that have "caused a new wave of client defaults".

"The key factor in reducing the share of NPL has been growth in the loan portfolio [...] The portfolio of net corporate loans grew for seven consecutive months in 2023, including outside government programs, owing to improved demand for loans in hryvnia, taking into account the recovery in business activity. Retail unsecured consumer loans and mortgages have been rising," the NBU said.

The regulator cited corporate clients restructuring and restoring the servicing of problem debts as being among the other reasons for the reduction in the share of NPL, which has mainly occurred at state-owned banks. Writing off NPL to individuals has also played a role.

The NBU said that prior to the outbreak of hostilities in Ukraine, the share of NPL in the Ukrainian banking sector had been declining since 2018 from 55% to 27% as on March 1, 2022, and the volume of loans from banks had been growing.

As previously reported, the Ukrainian banking sector's overall loan portfolio totaled UAH 997.7 billion in 2023, which was 1% lower than the figure at the beginning of the previous year.

The official exchange rate as on February 8, 2024, is UAH 37.59/$1.