Banks' credit portfolio grows by 4.5% in Q2 for the first time since war began – NBU

The volume of the net retail hryvnia credit portfolio of banks in the second quarter increased for the first time since the onset of the full-scale invasion, rising by 4.5%, primarily due to the resurgence of card lending. Mortgage lending volumes also grew by 2.7% due to the eOselia (eHousing) loan programme, as reported by the regulator.

It is noted that in Q2, for the first time since the declaration of martial law, the proportion of non-performing loans to individuals decreased by 2 percentage points, mainly due to the write-off of non-performing loans. However, the proportion for business loans increased by 0.4 percentage points.

"The liabilities of solvent banks in Q2 increased by 5.3% due to a surge in client funds. Meanwhile, the NBU's refinancing share in bank liabilities for the quarter decreased almost fourfold, down to 0.2%, which corresponds to the July 2008 level," stated the National Bank.

According to the NBU data, during Q2, the volume of individuals' hryvnia funds grew by 7.5%. Specifically, term deposits of the population in hryvnia increased by 14.1% as banks increasingly competed with rates for longer deposits.

"The volume of hryvnia corporate deposits grew by 12.9% for the quarter, although the growth rate slowed down over the quarter. Funds in foreign currency grew more slowly, at 6.8%," the regulator highlighted.

In addition, the NBU points out that over the quarter, the dollarisation level of client funds decreased by 2.1 percentage points to 36%. It's specified that for the funds of the population, the reduction was more significant, to 34.6%, thanks to an increase in hryvnia funds and a decrease in the popularity of foreign currency deposits.

Moreover, the rate of 12-month deposits for individuals rose on average by 1.3 percentage points to 15.2% annually, due to the ability of banks to invest in the NBU's three-month deposit certificates at the accounting rate.

"Rates for individual loans slightly decreased over the quarter, to 28.5% annually, and for business loans, they fluctuated around 20% annually," the regulator added.

In addition, in Q2, the sector received almost the same profit as in the previous one, amounting to 34 billion UAH. As explained by the National Bank, this was due to steady growth in net interest income, primarily from highly liquid assets, and almost zero provisioning.

Background. Mind previously reported that the proportion of non-performing loans in the first half had decreased by 1.6%.