Credit rating agency Fitch Ratings has assessed Ukraine’s banking sector.

Ukraine’s banking sector has demonstrated considerable resilience during the war, aided by supportive monetary policy and lenient regulation, Fitch Ratings notes.

“We expect the main lending factors for banks to be fairly stable in 2024, which determines our neutral forecast for the sector,” the statement said.

With reference to NBU data, Fitch points to the fact that six of the seven rated Ukrainian banks have sufficient capitalization, and only the state-owned Ukreximbank needs capital support.

“However, capital risks remain high due to the military conflict and its impact on the banking sector and the economy. The long-term foreign currency issuer default ratings of all Fitch-rated Ukrainian banks are CCC-, one notch higher than sovereign rating,” the publication says.

The agency expects bank profitability to be a key source of capital improvement and will continue to support capitalization in 2024. However, returns in 2024 are unlikely to be as high as last year, as interest rates are now much lower.