In 2024, banks up their profits by 25% to record-breaking UAH 103.7 billion

According to preliminary data, solvent banks received UAH 103.7 billion in net profit in 2024 due to the steady growth in the volume of high-quality loans and investments in government bonds, which is 25% more compared to 2023 (profit was UAH 83 billion).

This is announced in a statement by the National Bank of Ukraine (NBU), Ukrainian News Agency reports.

The profitability of loans in 2024 stabilized, but their volumes continued to grow.

Over the year, the net hryvnia loan portfolio of businesses grew by 21%, and the population by almost 40%.

An additional factor in maintaining banks' profitability at the end of 2024 is the growth in the volume of investments in government bonds by 35% per year.

At the same time, the cost of funding banks decreased slightly due to a decrease in market deposit rates in the first half of 2024, so banks maintained a fairly high net interest margin.

Net commission income for the year also increased by 11.3%.

In December, for the first time during a full-scale war, its monthly volume reached the pre-war level.

The high quality of the loan portfolio led to a low level of deductions to reserves for credit risks.

The volume of deductions to reserves for assets at the end of the year is almost half the figure for 2023.

Despite a further increase in banks' administrative expenses, their operating efficiency remains high.

At the end of 2024, only nine small banks out of 61 solvent ones were unprofitable with a total loss of UAH 418 million.

These are mainly institutions with inefficient business models and a number of long-standing problems.

The high financial result and the repeated increase in the bank profit tax rate to 50% increased the amount of profit taxes accrued by banks for 2024 to UAH 83.7 billion.

However, their final amount will be clear only after the annual audit of bank statements.

Preliminary estimates indicate that the return on capital in the sector by the end of 2024 is about 30%.

In general, the banking system remains profitable and sufficiently capitalized, maintaining the ability to lend to the economy.

At the same time, retrospective taxation of banks for the second time in a row may still affect the condition of individual financial institutions.

Some of them risk violating capital adequacy requirements after the final calculation and reflection of profit tax.

It is noted that maintaining profitability and implementing capitalization programs will allow financial institutions to restore capital.

However, the uncertainty of tax policy may continue to deter banks from more actively increasing operations.

According to updated data, banks received UAH 83 billion in net profit in 2023 after charging UAH 77 billion in income tax at an increased rate of 50%.