Sergiy Gromov: Leaders in the volume of NPL – state banks
According to the data published by the NBU on October 19, the share of non-performing loans (NPL) in the banking system of Ukraine from January to September 2021 decreased by 5 percentage points to 34.99% (as of January 1, 2021 it was 41%). In absolute terms, the NPL portfolio in the period from January 1 to September 1 decreased by UAH 37 billion to UAH 393 billion.
“We have seen a significant decrease in the share of problem loans since the beginning of 2021. The main reason for the decrease in the concentration of NPL in the banking system of Ukraine is the growth of lending by 7% (+UAH74 billion since the beginning of the year), primarily due to the issuance of hryvnia loans,” commented Delo.ua Sergiy Gromov, Director of the Investment Department of Investohills Group of companies.
Over the eight months of 2021, the volume of hryvnia loans issued to non-financial corporations increased markedly by 15.4%, and by 12.3% in annual terms. The growth rate of household lending has also noticeably accelerated – up to 21.8% since the beginning of the year and by 17.2% year-on-year. Loans for the purchase, construction and reconstruction of real estate in January-August 2021 increased by 28.8% compared to the same period last year.
Traditionally, the main part of the NPL – 73% – is accounted for by state-owned banks. Namely: UAH 177 billion of problem debt is concentrated in PrivatBank, UAH 111 billion – in Oschadbank, Ukreximbank and Ukrgasbank. The remaining part of the NPL, about UAH 83 billion, is in banks with foreign capital, and another UAH 22 billion is in banks with private Ukrainian capital. In percentage terms, the structure of the NPL looks like this: PrivatBank – 45%, other state-owned banks – 28%, banks with foreign capital – 21%, banks with private Ukrainian capital – 11%.
The share of problem loans in the total volume of loan portfolios of state-owned banks still exceeds 50%. At the same time, it should be borne in mind that a significant part of the NPL was transformed into real estate (which remained on the balance sheets of banks and, most likely, does not generate income), and part of the loans were restructured. That is, the situation is somewhat worse than we see in bank balance sheets.
“State-owned banks do not use the recommendations of the NBU, which insists on more active application in practice of the resolution of the Cabinet of Ministers No. 281 of April 15, 2020. The norms of this document provide for the sale of distressed debts at public auction, including at a discount. To date, NPL debts of state banks have not been sold either on Prozorro or on OpenMarket. Bidding in the bankruptcy procedure does not count,” said Sergiy Gromov.
Most of the problem debt (more than 50% of NPL) is accounted for by trade. Moreover, 84% of retail loans (about UAH 140 billion) are problematic. And the NPL of the trade sector is more than twice the volume of problem debt of all industries.
The share of NPL in industry is 33%. However, the amount of problem loans does not decrease. Although the government regularly makes statements regarding the priority of the development of industrial production in the country. At the same time, state-owned banks that actively lend to Ukrainian producers have all the tools to transform NPL loans into standard ones through debt restructuring.