Financial sector news

In the first quarter of 2025, banks maintained profitability, increased lending to businesses and individuals, and grew their capital. However, investments in government bonds and deposit certificates declined. This is stated in the banking sector review.

According to the NBU, the key driver of bank asset growth in the first quarter was the expansion of the loan portfolio: hryvnia loans to businesses grew by 9.5%, and consumer lending by 6.7%. At the same time, investments in government bonds decreased by 2.5% due to the redemption of securities amid limited supply from the government.

The share of non-performing loans (NPLs) continued to decline and currently stands at 28.6%, down 1.7 percentage points for the quarter. This indicates an improvement in the quality of banks' loan portfolios.

During the quarter, there was also an increase in the cost of loans and deposits, which is associated with the NBU's increase in the discount rate to 15.5%. Interest rates on business loans averaged 15.5% per annum, and 29.1% for the population.

The sector remains highly profitable: banks earned UAH 40 billion, of which more than 65% was provided by state-owned banks. Profits are supported by efficient operations and low provisioning costs.

The number of operating banks decreased to 60, with one bank voluntarily surrendering its license. At the same time, the share of state-owned banks in net assets remained stable at 53.3%.