No overnight loans: seven financial companies agree to lend to consumers responsibly
31 March 10:56
The Association of Ukrainian Banks and seven financial companies engaged in consumer lending have signed a Memorandum on ensuring responsible lending. This was reported by the Association of Ukrainian Banks, Komersant ukrainskyi reports.
The memorandum should promote market transparency, financial inclusion, and fair conditions for all participants in the financial ecosystem.
Why did the idea of signing the memorandum arise?
The Association of Ukrainian Banks initiated the creation of the memorandum as a self-regulatory initiative.
“The purpose of the memorandum is to show that consumer lending companies can act responsibly and honestly, without additional pressure from the state,” Andriy Dubas, President of the Association of Ukrainian Banks, explained in a commentary to Interfax-Ukraine.
According to him, there are many companies operating in the consumer lending sector in Ukraine, but the bulk of lending is made up of about 20 major players, which cover up to 90% of the market. The problem, according to Andriy Dubas, is that if a small company operates dishonestly, it creates a negative image for the entire market.
“That is why the responsible participants decided to sign the memorandum to show their openness and support the NBU’s initiatives to streamline this area,” said the president of the Association of Ukrainian Banks.
The participants of the memorandum are Aventus-Ukraine (CreditPlus), Moneyveo Fast Financial Assistance (Moneyveo), 1 Safe Agency for Necessary Loans (My credit), Novi Kredy, Viginfand Ukraine, Multikredit (bee credit) and Consumer Center (ShvydkoGroshi).
What did the signatories agree on?
The Memorandum, in particular, provides for
– compliance with the 1% daily interest rate limit for lending to individuals;
– use of a risk-based approach in assessing borrowers’ solvency;
– limiting the issuance of loans at night to prevent consumers from making rash financial decisions;
– transparency and responsibility in cooperation with collection companies;
– inadmissibility of ownership or management of financial institutions by citizens of the aggressor country or persons associated with it.
According to Andriy Dubas, President of the Association of Ukrainian Banks, there are separate rules for collection activities: it is forbidden to use photos of debtors, call their relatives or use other unethical methods of pressure.
What is the demand for consumer loans?
Consumer demand for consumer loans grew throughout 2024. This is evidenced by the NBU’s survey on bank lending conditions for the first quarter of 2025.
Demand for consumer loans was boosted by better consumer sentiment and higher spending on durable goods. According to a number of banks, the optimistic outlook for the real estate market and lower interest rates fueled demand for mortgages.
However, some banks noted that households’ demand for loans remained subdued due to competition from other banks, and that the increase in savings curbed customers’ interest in consumer loans.
In the fourth quarter of 2024, the approval rate for consumer loan applications increased, while that for mortgages decreased, mainly in some large financial institutions. Banks reduced the cost of loans to households. At the same time, they slightly increased the size of consumer loans and eased collateral requirements for mortgages.
What about NPLs?
As of February 1, 2025, the share of non-performing loans in the banking sector amounted to 30.5%, which is only 0.2 percentage points higher than as of January 1, 2025. This was reported by the NBU.
At the same time, the share of non-performing loans to households has increased by only 0.1 percentage points to 15.6% since the beginning of the year.
The share of NPLs remained almost unchanged in state-owned and foreign banks. In contrast, the share of NPLs in private banks continues to decline.
