Ukrainian banks appear to be in ‘poor shape’ as the fallout from Russia’s invasion saw them overall lose 4.6 billion hryvnas over the two quarters of 2022.
According to a report by National Bank of Ukraine, only 47 out f 68 banks reported profits in January-June – their net profit stood at 10 billion hryvnas. By contrast, other 21 banks reported 14.6 billion hryvnas in losses.
Loan revenues slumped from 35% in January-February to 19% in March-June as all leading banks had to introduce a moratorium on loan repayments or even lowered their interest rates on consumer loans, which prompted a revenues drop on retail loans.
Frustrated demand for banking sector services has also impacted net interest margin- it has slumped by 35% compared to 15% growth it showed before the war, in January-February.
Meanwhile, total operating income remained somewhat ‘positive’- 33,5 billion hrynvans in the second quarter of 2022, compared to 23,5 billion hryvans for the same period last year.
The gloomy results in January-June are, at large, attributed to the banks rushing to build reserves on the fears of potential losses amid the ongoing war. According to National Bank of Ukraine, the domestic banks have set aside funds of 57.9 billion hryvnas.
‘Realization of loan risks as the result of a full-scale war led to unprofitability of the banking sector, for the fist time over the last 5 years. Reserves for credit losses will keep growing,’ said deputy chief of Ukraine’s National Bank Yaroslav Matuzka.