The share of non-performing loans in the first half decreased by 1.6% – National Bank of Ukraine

The volume of non-performing loans (NPL) in the banking sector on 1 July 2023 amounted to 425 billion UAH, which is 7 billion UAH lower than the figure on 1 January. At the same time, due to a reduction in the loan portfolio, the share of non-performing loans for the half-year increased by 0.8 percentage points – to 38.9%.

This was reported by the regulator.

It is noted that in June, the share of non-performing loans in the banking sector decreased by 0.2 percentage points due to better quality of new loans, mostly provided within government programs, and the write-off of non-performing retail loans.

According to the National Bank of Ukraine, compared to last year, banks this year have recognised more credit losses, which led to a slowdown in their activity. Since the beginning of full-scale warfare, banks have already put aside over 103 billion UAH in reserves, which represents almost 15% of the loan portfolio that banks had at the end of February 2022.

Recall that the National Bank improved the assessment of probable portfolio losses due to the war to almost 20% from the previous estimate of 30%, as the pessimistic scenario of prolonged negative consequences from the electricity shortage did not materialise.

"At the same time, an assessment of the resilience of banks and the banking system is underway, following which individual banks are likely to have to reflect additional losses from credit risk," the NBU reported.

The regulator also noted that before the war, the share of non-performing loans (NPL) in Ukrainian banks had been decreasing since 2018 (from 55% to 27% as of 1 March 2022), while the volume of loans in banks had been growing.

Background. Earlier, Mind reported that as of 1 May, the share of non-performing loans (NPL) was 39.3%.