Banks Cut Net Profit 68% To UAH 24.7 Billion In 2022

In 2022, solvent banks received UAH 24.7 billion in net profit against UAH 77.4 billion in 2021.

This is stated in the NBU message, Ukrainian News Agency reports.

The return on equity in the sector was 10.9%, against 35.1% a year ago.

The main factor in the decline in profitability was a significant increase in deductions to reserves for losses incurred and expected as a result of the war.

Thus, deductions to reserves for loans for the year amounted to UAH 107.1 billion, another UAH 11.7 billion was formed for other assets and risks.

Net interest income increased by 29% compared to the previous year.

Interest income rose in large part due to a substantial inflow of liquidity into the banking sector and its placement in assets with higher than 2021 yields.

After a sharp decline in the first months of the full-scale war, commission revenues resumed growth thanks to steady demand for banking services and a gradual resumption of tariffs.

During the second half of the year, net commission income almost recovered to the figures of 2021, but for the year it decreased by 14% year-on-year.

Operating expenses accounted for about half of the combined net interest and net commission income.

Net operating profit before deductions to reserves grew by 75% for the year.

In particular, according to the results of the 4th quarter, this figure was UAH 41.9 billion compared to UAH 25 billion in the 4th quarter of 2021.

Operational efficiency provides banks with the first line of defense to absorb credit losses.

The National Bank expects that financial institutions with viable business models that are able to generate operating income will successfully cope with risk loss coverage and capital recovery.

As of January 1, 2023, out of 67 solvent banks, 46 were profitable and received a net profit of UAH 45.6 billion, which blocked the losses of 21 banks totaling UAH 20.8 billion.

The sector's profits are concentrated, with the five most profitable banks forming 89% of all profits.

As Ukrainian News Agency earlier reported, in 2021, banks' profits amounted to a record UAH 77.5 billion.

In 2020, banks’ profits decreased by 29% to UAH 41.3 billion.

In 2019, solvent banks received UAH 59.634 billion of net profit.