Ukraine is experiencing the longest period of credit expansion in the last fifteen years. For over a year, the volume of hryvnia loans for business has been increasing annually by approximately one-third, while lending to the population has shown similar growth rates for two consecutive years. This is reported by National Bank of Ukraine, the portal PromPolitInform reports.
Companies of various scales are attracting loans, with an increase in the share of loans for enterprises of the defense industrial complex and projects for the restoration of energy infrastructure being recorded. Over the past decade, the number of companies using active bank credit support has doubled. Meanwhile, currently only a third of enterprises from the total volume of market assets use credit funds, indicating significant potential for further expansion of financing.
The National Bank recommends that financial institutions more actively develop market instruments and offer products without the involvement of state subsidies, including factoring and consortium lending. This is due to the expected increase in debt for the payment of compensation under the state program “Affordable Loans 5-7-9%”. Instead, loan guarantee programs from international financial organizations can become an effective alternative to subsidies, which should logically be extended to private Ukrainian banks as well.
Indicators of credit portfolio quality and market risks
The quality of the credit portfolio of Ukrainian banks shows positive dynamics. As of May 1, 2026, the share of non-performing loans in the banking sector decreased to 12.6%, and the default rate on hryvnia business loans does not exceed 3%. The growth in retail lending volumes does not pose a threat to the system due to the balanced risk assessment policy of banks and the increased solvency of citizens against the backdrop of rising incomes.
At the same time, the risks of over-indebtedness remain relevant for clients of non-bank financial institutions, which are recommended to improve internal standards for assessing borrowers. The development of the mortgage market is currently being restrained due to the slow transformation of the state program supporting housing lending.
The impact of taxation and the profitability of the banking sector
The profitability of the banking sector is declining due to the growth of administrative costs caused by a staff shortage, as well as the return of credit risk costs to indicators observed before the start of the full-scale invasion. An additional pressure factor is the increased corporate income tax rate for banks, which reduces their profitability to the average European peacetime level. Such a decrease in profitability complicates the attraction of private capital and creates obstacles to the privatization of state banks.
High tax burden also limits the ability of financial institutions to independently generate capital for further development. Loans, which form an increasingly larger share of assets, require significantly more capital provisioning compared to risk-free instruments. At the current profitability, the growth rates of banks are limited to an indicator of 15–20% per year. The development of state banks is additionally restrained by the uncertainty of privatization plans and unpredictable volumes of dividend payments.
Photo: National Bank of Ukraine
