The share of non-performing loans (NPL) in banks decreased in the first nine months of 2024 to 32%, but is still higher than the pre-war level of 2023, when it was 30%, according to NBU data, UNN reports.
Details
According to the NBU, as of October 1, 2024, the share of NPLs in the banking sector decreased to 32.3%, or 5 pp compared to the beginning of the year. The NPL volume decreased by UAH 6.9 billion to UAH 415.5 billion.
Excluding the debts of PrivatBank's former owners and old debts (from before the banking system was rehabilitated during the 2015-2017 crisis), the share of NPLs in the banking system is 20.9%.
The NBU named the key factors behind the positive dynamics.
- further increase in the volume of high-quality hryvnia loans by banks, given the gradual recovery in demand for loans and improved lending conditions, including a reduction in lending rates to the level of the end of the “pre-docking” year 2019. In the first nine months of 2024, the volume of gross loans in the banking system increased by UAH 154 billion or 13.6%.
- write-offs of NPLs, primarily retail loans, the share of NPLs in which decreased by 5.9 percentage points to 17.6%. At the same time, the quality of corporate debt settlement also improved, with the share of NPLs in business loans falling by 3.4 pp to 40.7%.
"The reduction in the share of NPLs was recorded in all groups of banks," the NBU said.
Addendum
The growth of non-performing loans (NPLs) has been observed since the beginning of the full-scale Russian invasion in February 2022.
Prior to Russia's full-scale invasion of Ukraine, the share of non-performing loans (NPLs) in Ukrainian banks had been steadily declining since 2018 (from 55% to 27% as of March 1, 2022).
How do banks settle NPLs? According to the NBU, the most common tools used by banks to deal with NPLs are out-of-court restructurings. They are designed to mitigate the debt burden on the client and enable them to restore their solvency.