Lending Activities of Ukrainian Banks: Trends and Prospects

Abstract

The article defines the role and importance of credit activities of banks in ensuring the post-war reconstruction of Ukraine. Comprehensive changes to legislation and state programs aimed at supporting the Ukrainian economy, the formation of a modern banking sector, the activation of bank lending as an important factor in the effective functioning of the country's banking system in the conditions of martial law and its subsequent recovery are summarized. The war of the Russian Federation on the territory of Ukraine led to the deterioration of the quality of banks' loan portfolios, the destruction of assets and collateral, loss of income and deterioration of borrowers' solvency. This led to a decrease in their ability to service loans. The banking sphere is the most important component of the financial sector of Ukraine and provides banking service needs of the real sector of the economy, the population, while contributing to the economic security of the state. An analytical assessment of banks' credit activity was carried out in order to identify trends in its dynamics for the period 2011–2021. During the period 2011–2021, the credit portfolio of the banking system of Ukraine increased from UAH 755 billion. up to 1,065.3 billion hryvnias (almost 1.4 times). During the same time, the volume of loans granted to legal entities increased by 1.6 times, and lending to individuals increased by 1.3 times. It was emphasized that in the current conditions of martial law in 2022, almost all domestic banks reduced their credit activity. The total credit portfolio of the banking system decreased to 700.9 billion hryvnias. The study of lending trends to the population indicates a reduction in lending to individuals by almost all banking institutions. Proposals have been formulated for strengthening the role of the banking system and active use of its credit potential in ensuring the economic recovery of Ukraine. The prospect of further research in this direction is the identification of opportunities to reduce the cost of credit resources and the analysis of priority areas of financial and credit support for the post-war reconstruction of Ukraine.