NBU says banking sector is resilient to challenges and ready to lend even more

20 January 08:49

The National Bank of Ukraine has reported on the successful completion of the second stage of the transition to a new capital structure by banks. This was announced by Danylo Hetmantsev, Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy, Komersant ukrainskyi reports.

He reminded that since August 2024, banks have switched to a new capital structure in accordance with EU directives: instead of a 2-level structure (core and additional capital), a 3-level structure (core capital of the first level, additional capital of the first level, and capital of the second level) was introduced.

At the same time, according to him, the methodology for calculating capital components has changed. In particular, the core Tier 1 capital was allowed to include profits of previous years and interim profits (without its confirmation by the current year’s audit in accordance with the transitional provisions), which were previously allocated to additional capital. The calculation of regulatory capital was also changed. Transition periods were established to comply with the updated regulatory capital ratio.

As the MP explains, the changes are intended to strengthen the stability of the banking system and protect the interests of depositors.

What does the NBU’s supervisory statistics show?

As of January 1, 2025 , the capital adequacy ratios for the banking system were met:

– Regulatory capital adequacy ratio – 17.35% (with a transitional ratio of at least 8.5% by the end of 2024, at least 9.25% by the end of the first half of 2025, and at least 10% thereafter).

– The Tier 1 capital adequacy ratio is 16.92% (with the standard of 7.5%).

– Tier 1 capital adequacy ratio – 16.92% (with a standard of 5.625%).

Assessing the results of the 2nd stage of the transition to the new bank capital structure, the NBU stated that as of January 1, 2025:

– The banking system maintains a sufficient (at least two times) capital reserve at all levels.

– All banks comply with the transitional minimum standards.

– The current level of capital generally ensures the sector’s resilience to possible shocks and allows it to continue to grow its loan portfolio.

– Due to the increase in the corporate income tax rate to 50% in 2024, the capital adequacy ratios of some banks will decline. Some of the banks may need to revise their capitalization programs based on the results of the 2023 resilience assessment. However, in general, banks will retain sufficient capital reserves and will be able to increase lending.

Thus, as Danylo Hetmantsev summarizes, despite the tax increase, the banking system remains sufficiently profitable and adequately capitalized, which is a prerequisite for increasing lending while maintaining the sustainability of the sector.

In 2025, the NBU will monitor the banking system’s resilience

At the end of last year, the NBU approved the terms of reference for assessing the resilience of banks and the banking system in 2025.

According to the approved concept, in 2025, the assessment will be carried out in three stages and will include: an assessment of asset quality by independent auditors as of January 1, 2025, extrapolation of its results for all banks (if necessary), and stress testing for the largest banks under baseline and adverse macroeconomic scenarios with the determination of the required levels of capital adequacy ratios.

In 2025, 21 banking institutions, which account for more than 90% of the banking system’s assets, will undergo stress testing. The banks were selected based on three criteria: the size of risk-weighted assets, the amount of deposits taken from households, and the amount of net loans to households. The list of banks subject to the stress testing procedure is available here.

Василевич Сергій
Editor