The share of non-performing loans (NPLs) in the banking sector was 38% as of January 1, 2023, compared to 30% as of January 1, 2022.
This is stated in the NBU message, Ukrainian News Agency reports.
The volume of non-performing loans increased for the year by UAH 87 billion to UAH 432 billion.
It is noted that Russia's full-scale military invasion of Ukraine reversed the steady trend of a gradual reduction in the share of non-performing loans (NPLs) in Ukrainian banks, which lasted from 2018: during this time, the volume of NPLs decreased by almost UAH 300 billion, the share in the loan portfolio decreased from 55% to 27% as of March 1, 2022.
The consequences of war - destruction of assets and collateral, loss of income and deterioration of solvency of borrowers reduce their ability to service loans, impair the quality of credit portfolios of banks and cause an increase in deductions to reserves.
Banks have already recognized significant credit losses: since the beginning of the full-scale war, the volume of contributions to reserves for loans has exceeded UAH 100 billion and accounts for more than 12% of the loan portfolio that banks had at the end of February 2022.
Potential losses of the loan portfolio due to war, economic crisis and energy terror of the aggressor country can reach 30%.
The NPL coverage ratio (ratio of all provisions for loan losses to NPL) was 95% at the end of 2022.
As Ukrainian News Agency earlier reported, the National Bank will assess the quality of assets in 2023 to make sure that the approaches of banks to assessing credit risk are correct.
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