Ukraine's state banks write off UAH 111B worth of NPLs - NBU

"In 2020, we began our active work to clean banks of unnecessary burdens. Last spring, the government approved a decision on NPL restructuring tools in state-owned banks, and in late June, the Financial Stability Council presented three-year cleanup plans. Since then, the process of reducing the share of NPLs has moved from a half-dead point," Shevchenko wrote.

He noted that in the third quarter of 2020, the share of non-performing loans decreased by 2.9 percent, to 45.6% of the loan portfolio. This process continued in October and the share of NPLs on November 1 was 43.4%.

"Significant work has been done by state-owned banks, which in June-November wrote off UAH 111 billion worth of bad debt. This allowed them to reduce the share of NPLs in their portfolios below 60% for the first time in a long time," he said.

According to him, today non-performing loans do not put pressure on the profitability of banks and their capital. After all, the level of redundancy is constantly growing and today exceeds 90%. However, such a share of non-performing loans is not only a burden for banks, but also a question of their investment attractiveness that needs to be increased.

"Therefore, we advise state-owned banks to continue to implement three-year plans to reduce non-performing loans. All banks should continue to actively monitor and ensure the work with non-performing loans," Shevchenko said.

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