BANKING SYSTEM OF UKRAINE: CURRENT DEVELOPMENT TRENDS

Анотація

The banking system of Ukraine entered the crisis caused by the COVID-19 pandemic highly profitable, capitalized and with a high liquidity reserve. Macro-prudential policy of the National Bank of Ukraine has prepared the banking sector well for crisis phenomena. Macro-prudential policy of the National Bank of Ukraine has prepared the banking sector well for crisis phenomena. In 2020, only two banks (as in the previous year) were declared insolvent for failing to meet capital regulations. The regulator relaxed bank requirements during the pandemic to reduce its influence on the banking system. In the article the dynamics of the main monetary policy instrument of the National Bank of Ukraine - the interest rate is investigated. The main trends in the development of the banking system over the last few years have been studied. In times of crisis, banks' assets, capital and liabilities, in particular fixed-term funds of both natural and legal persons, are growing. The fastest growth rate of funds of economic entities and funds of natural persons was exactly 2020, in which legal entities increased the amount of their fixed funds in banks by 43.3 per cent and natural persons significantly increased the volume of their funds in current accounts. However, lending (in 2019-2020) and bank profitability (during 2020) have been negative. The reasons for this are the financial difficulties of clients during the crisis and uncertainty about the future, the deterioration of the quality of credit and the additional formation of reserves by banks. Credit risk is and will continue to be the defining factor for banks. During the study period, banks with public capital have poor quality credit portfolios, and private banks have the best. Ten banks have been identified as having the largest amount of non-performing loans as of 01.01.2021, seven of which are systemically important banks. They need to make greater use of the tools available to deal with non-performing loans. A high share of NPL negatively affects the profitability and investment attractiveness of financial institutions. And the fact that 77% of non-performing bank-sector credit belongs to seven systemically important banks is a threat to the growth of systemic risk. Although the COVID-19 pandemic has had an impact on Ukraine’s banking sector, as on all other areas of society, there are as yet no significant threats to the banking system, it remains financially sustainable and profitable.

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