Banks receive record-breaking UAH 125.6 billion profit in 10M

In ten months of 2024, solvent banks received UAH 125.554 billion in net profit.

This is stated in the message of the National Bank of Ukraine (NBU), the Ukrainian News agency reports.

In October, banks' profit amounted to UAH 7.925 billion.

Net interest income of banks for the reporting period amounted to UAH 192.8 billion, which is 17.4% more than in the same period last year, and remains the main source of banking income (69% in the structure of total bank income).

Accrued income tax - UAH 37.5 billion (+69.9%).

Return on bank capital (net profit to equity of banks) as of November 1, 2024 - 43.3%.

According to the NBU, the reintroduction of taxation of bank profits at a rate of 50% in 2024 will lead to a decrease in this indicator to 30%, which is comparable to pre-war indicators of return on capital (as of November 1, 2021 - 32.47%).

Regulatory capital adequacy ratio – 17.52% (by the end of 2024 it should be no less than 8.5%), Tier 1 capital – 17.08% (should be no less than 7.5%), Tier 1 core capital – 16.90% (should be 5.625%).

Thus, banks maintain a more than 2-fold capital adequacy reserve.

According to the Member of the Verkhovna Rada Danylo Hetmantsev, the banking system continues to demonstrate high profitability.

It is based on several factors.

Firstly, this is a structural liquidity surplus, due primarily to a significant budget deficit due to the war and the receipt of international aid (currency) to finance it. This causes a constant new inflow of funds into the banking system.

Secondly, this is the preservation of a high interest margin (the spread between the rates on active bank operations and raising funds).

Thirdly, banks continue to receive a larger share of interest income from transactions with government securities (government bonds and deposit certificates).

In particular, according to the NBU, in the third quarter of 2024, interest income from government bonds and deposit certificates amounted to 5.5% of net bank assets, while from lending – 4.8%.

At the same time, the share of government bonds in interest income tends to grow, and deposit certificates – to decrease.

"In such conditions, I would like to note once again that the decision to re-apply the 50% rate to bank profits at the end of 2024 is justified. These additional funds will go to finance the military. At the same time, most banks will maintain a high level of profitability, profitability and capitalization, necessary to ensure the stability of the banking system and the restoration of lending," Hetmantsev noted.

This year, the Verkhovna Rada also set a profit tax rate of 50%.

As Ukrainian News Agency earlier reported, for 2023, according to updated data, banks received UAH 82.8 billion in net profit after charging UAH 76.2 billion of income tax at an increased rate of 50%.