In January–March 2021, banks made US$ 393,252,598 (UAH 10.9 billion) in net profit. This is a 32% decrease from the same period of last year, when the banking sector earned more than US$ 577,251,520 (UAH 16 billion), but a significant increase on the previous quarter, for which banks reported US$ 75,764,262 (UAH 2.1 billion) in net profit.
“The main impediments holding back the growth in the sector’s profitability in Q1 were changes in the fair value of securities. The overall result of trading and revaluation transactions was US$ 183,998,922 (UAH 5.1 billion) in losses, down from US$ 277,802,294 (UAH 7.7 billion) in profit in Q1 2020,” reads the recent report of the National Bank of Ukraine (NBU).
At the same time, loan loss provisions made by banks in January–March fell by 58.3% yoy to US$ 72,156,440 (UAH 2 billion). In the same period of 2020, banks formed US$ 169,567,634 (UAH 4.7 billion) in loan loss provisions.
The recovery in demand for banking services, amplified by the sustainably lower cost of funding, had a positive effect on the interest income of banks. Net interest income was up 21.9% yoy compared to 6.8% yoy a year ago. The growth in cashless transactions fueled an increase in net commission income in January–March by 15.1% yoy, up from 7.9% yoy in the same period of 2020. Net interest and commission income is currently sufficient to cover the administrative costs of most banks.
As of 1 April 2021, 66 out of 73 solvent banks were profitable, with 7 banks taking a total of US$ 3,607,822 (UAH 100 million in losses.
The sector’s profits became less concentrated: the five most profitable banks generated 57% of all profits compared to 83% in 2020.
