Banking system of Ukraine emerges from red and breaks even, - Moody’s

Source : 112 Ukraine

The level of the capitalization of the bank system in 2017-2018 will remain stable
17:26, 26 October 2017


The international rating agency Moody’s thinks that the Ukrainian banking system remains to be insolvent but it is close to the surmounting crisis. Director of Bank Group Moody’s Investors Service Yaroslav Sovgyra claimed this at CIS bankers VI Ukrainian Banking Forum as Ukrainian News reported.

Moody’s predicts that the economic growth and the decrease of the lending rates will encourage the decrease of the level of the troubled loans in Ukraine up to 50% in Ukraine until the end of 2018.

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‘We expect that the level of the troubled loans in the bank system of Ukraine will decrease due to the reorganization and debt relied due to the fact that the economy growths, the lending rates decrease and there is the healthy increase of the credit portfolio. But at the moment the level of the troubled loans in Ukraine is the highest in the CIS countries and Eastern Europe. It will need a few years to make the troubled loans to come at the appropriate level’, he claimed.

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Sovgyra noted that the Ukrainian banking system remains to be insolvent but it succeeded to emerge from red and break even in comparison with the previous year.

‘There is a coefficient when we correlate the level of the troubled loans with the level of the capital and reserves. If this coefficient is more than 100% then we can consider this banking system as close to the insolvency. If we reserve all troubled loans then there will be no capital. The coefficient of Ukraine was 150% in 2015 and the index improved up to 117% in 2016 but the system remained to be insolvent. N, w this index aims to the break-even and it is bad but acceptable. At least the system emerged from red and broke even’, he concluded.

Related: National Bank expects deceleration of inflation

Moody’s agency thinks that the reform of the state banks and reorganization of the troubled loans are the main challenges for Ukraine.

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Moody’s agency improved the ratings of six Ukrainian banks in August.

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