Problem loans are accumulating in Ukrainian banks.

Wednesday, May 3, 2023
Problem loans are accumulating in Ukrainian banks.

As of April 1, the share of non-performing loans in bank portfolios was 38.8% and increased by 0.7% during the last quarter. The volume of problem loans amounted to UAH 434B and increased by UAH 2B in three months, according to NBU statistics. The total volume of loans in the first quarter decreased by UAH 14.5B, or 1%, and amounted to UAH 1.119T as of April 1.

The Central Bank notes that before the full-scale war, the share of problem loans in Ukrainian banks had decreased since 2018 from 55% to 27% as of March 1, 2022, while the loan portfolio volume had been growing. However, since March of last year deductions to loan reserves have exceeded UAH 107B and represent more than 13% of banks’ loan portfolios at the end of February 2022.

Preliminary estimates from the NBU show that the potential credit portfolio losses due to war and economic and energy crisis may reach 30%.

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