Functioning of the Banking System of Ukraine: Problems and Prospects

Анотація

The article is aimed at analyzing the state of the banking system and forming perspective directions for its development. The main attention in the article is paid to the study of the peculiarities in the functioning of the banking system of Ukraine, its problems and prospects. The carried out analysis showed that the banking system of Ukraine has a sufficient reserve of financial sustainability. The pandemic of 2019 and the war with Russia negatively affected the entire banking system of Ukraine, the number of domestic banking institutions is rapidly decreasing. At the same time, the banking system in the context of war operates smoothly, the level of liquidity of domestic banks remains at a sufficient level due to the presence of significant reserves of highly liquid assets and a slight outflow of banking deposits of the population and business. The dominant tendency in the banking system of Ukraine is the unprecedented crisis caused by the war started by Russia, as result of which significant losses are expected in the banking sector of our State, which is already characterized by high credit risk, large amounts of deductions to reserves and poor quality of loan portfolios and their depreciation. A number of promising directions as to operation of the banking system of Ukraine are proposed, in particular, banks need to apply loan holidays on a weighted basis, carefully assess the financial condition of borrowers, accurately restructure debts, develop cybersecurity, and the NBU should weaken regulatory requirements in case of violation of capital or liquidity standards by banks, stimulate the introduction of various new technologies for various banking payments. Credit risk is the main indicator of the effective activity of domestic banks, which as of today has its negative impact on the entire banking system. The NBU needs to continue to implement anti-crisis measures to increase the profitability, solvency and liquidity of Ukrainian banks.

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