Individuals and companies owe to financial institutions over 90 billion hryvnias.
Political instability and devaluation of the hryvnia exchange rate has led to the expected increase in the share of non-performing loans. As of 1 May 2014, legal entities owed to bankers 69 billion hryvnias; individuals, 23.2 billion. Whereas on 1 January, the level of overdue and doubtful debts of legal entities to banks amounted to 45.9 billion hryvnias; of individuals, 18 billion hryvnias.
At 25 largest and large banks, as classified by the NBU, the overdue and doubtful debts as of 1 May were at 40% of the loan portfolio. Of which the nonrecoverable debts accounted for 15%, with the significant share of debts originated before 2009. For instance, at VAB Bank the level of such nonrecoverable debts is 11%.
One of main roles in the growth of non-performing loans was played by the hryvnia devaluation. According to bankers, the growth in problem debts to the bank in absolute values is connected with the revaluation of foreign currency debts, which roughly corresponds to the hryvnia devaluation rate.
The Deputy Chairman of the Management Board of FUIB Fedot Yeryomenko names other factors, which impacted the level of overdue debts. In the first place is the Crimea annexation. The events in the peninsula created additional difficulties, for example, in collection of debts, and resulted in the significant deterioration of the portfolio. “Ahead is the deterioration of the macroeconomic situation in the country, which significantly impacts the solvency of individuals and legal entities,” continues Yeryomenko.
Source: Forbes Ukraine
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