The growth in net hryvnia loans to clients bolstered the banking sector’s assets for the second consecutive quarter. For businesses, the role of subsidized lending continued to decline, while the quality of the loan portfolio improved. These are takeaways from the Q2 2025 Banking Sector Review.
The volume of the banks’ net assets rose 3.2% qoq in Q2, primarily due to a brisk build-up of the client loan portfolio by the banks, according to the Review. By contrast, the portfolio of domestic government debt securities declined in volume, while that of certificates of deposit remained almost unchanged.
The volume of net hryvnia loans to businesses rose 9.5%, an increase that includes an 11.3% gain in the SME segment. All groups of banks ramped up their loan portfolios. Loans to businesses with over three years’ maturity were up 13.5%. The largest recipients were agriculture, wholesale trade, financial services, food processing, and machine building.
The role of subsidized lending provided under the Affordable Loans 5–7–9% program was steadily declining, primarily due to the availability of lending sources beyond the program.
The quality of the corporate portfolio had been improving for nearly two straight years, primarily because of a quick increase in the volume of new high-quality loans. The share of corporate borrowers that were in default on hryvnia loans as of the quarter’s end remained at just under 3%, better than the pre-full-scale-war average. Overall, the NPL ratio shrank to 27.0% (16.1% excluding PrivatBank’s former owners’ debts and state-owned banks’ legacy loans).
Bank liabilities added 3.5% qoq in Q2 as funding from both households and businesses increased. The volume of the banks’ hryvnia retail deposits has been growing each quarter for a year now. The growth in the volume of hryvnia corporate deposits in Q2 offset the seasonal decline of a quarter ago.
Deposit rates continued to rise during Q2 as the banks competed for term deposits. Rates on hryvnia loans to businesses – mainly on private banks’ new loans to large enterprises – grew more slowly than deposit rates.
The net interest margin rose to 7.5% thanks to higher loan yields. However, profit for Q2 2025 was down 2.1% from Q1 due to higher expenses. In July, the sector successfully met the regulatory capital adequacy ratio of 10% (except only for one small bank). According to test calculations, just one small bank is at risk of violating the leverage ratio that goes into effect in September.
The data on loans and deposits published in the Banking Sector Review differs from the corresponding information posted in the Monetary Statistics section of the NBU’s official website, because the former:
- contains information on the banks that were solvent as of the reporting date unless indicated otherwise
- includes data from bank subsidiaries operating abroad
- contains data on deposits in other resident and non-resident banks
- has been adjusted for loan loss provisions unless clearly stated otherwise
- contains data on personal certificates of deposit unless indicated otherwise
- contains information on non-resident clients.