The share of problem loans in Ukrainian banks may drop to 25% by year’s end.

According to the NBU, the share of NPLs in the banking sector as of July 1 had decreased to 27%, their lowest level since the start of the full-scale invasion, when non-performing loans accounted for over 39%.

“In just six months, this figure fell by 3.3 percentage points, and such positive progress was driven by growth in new, high-quality loans: The loan portfolio increased by ₴133.7B or 10.3%, reaching ₴1.432T”, according to bankers.

The reduction in the NPL share among individuals to 14% shows an improvement in borrowers’ payment discipline and increased consumer lending activity. In the corporate sector, the NPL ratio dropped to 35.5%, reflecting growth in business lending aimed at recovery and development after war-related losses.

It is expected that by the end of the year, the NPL share in the banking sector could fall to 25% or lower. This decline will be supported by ongoing growth in banks’ loan portfolios and proactive efforts to restructure and collect problem debt. However, war risks and economic instability in certain sectors may slow the pace of this decline.