Ukraine’s state-owned banks wrote off UAH 111 billion worth of bad debts in January-November, which allowed them to reduce the share of NPLs in their portfolios below 60% for the first time in a long while, Governor of the National Bank of Ukraine (NBU) Kyrylo Shevchenko wrote on his Facebook page.
“In 2020, we began our active work to clean banks of unnecessary burdens. Last spring, the government approved a decision on NPL restructuring tools in state-owned banks and in late June, the Financial Stability Council presented three-year cleanup plans. Since then, the process of reducing the share of NPLs has moved from a half-dead point,” Shevchenko wrote.
He noted that in the third quarter the share of non-performing loans decreased by 2.9%, to 45.6% of the loan portfolio. This process continued in October and the share of NPLs on November 1 was 43.4%.
“Significant work was done by state-owned banks, which in June-November wrote off UAH 111 billion worth of bad debt. This allowed them to reduce the share of NPLs in their portfolios below 60%,” he said.
According to him, today non-performing loans do not put pressure on the profitability of banks and their capital. After all, the level of redundancy is constantly growing and today exceeds 90%. However, such a share of non-performing loans is not only a burden for banks, but also a question of their investment attractiveness that needs to be increased.
“Therefore, we advise state-owned banks to continue to implement three-year plans to reduce non-performing loans. All banks should continue to actively monitor and ensure the work with non-performing loans,” Shevchenko said. (Ukrinform/Business World Magazine)