Non-banking market has growth potential despite decreasing number of actors - National Bank of Ukraine

MOSCOW. May 14 (Interfax) - The non-banking market has a growth potential despite the decreasing number of actors, head of the National Bank of Ukraine's department for supervision over financial companies Alexander Zalyotov said at a meeting with market representatives.

The market of financial companies was dynamic in terms of quantity and quality in 2023, Ukrainian media quoted Zalyotov's statement from the regulator account on social media. Later on, the market was left by actors, who either chose to cease operation and surrender their licenses or flagrantly breached the law, had their licenses revoked and were excluded from the State Register of Financial Institutions.

"The market is shrinking due to small unions with assets of less than 10 million hryvni, because of their inability to generate a cash flow sufficient for operation. Credit unions that failed to comply with regulations for a long time were unable to resume normal activities," Zalyotov said.

In 2023, business activity in the market of consumer lending, lending to small and medium-sized businesses, and financial leasing was uneven, but confidently resumed after stagnation in 2022. At the same time, the volumes of financial services began to gradually recover in the fourth quarter of 2022 and stabilized in the following year. Yet it was still slightly lower than in 2021. Financial companies were using licenses for currency exchange, factoring and lending to legal entities most actively.

It was also noted at the meeting that the lending market has almost recovered, while lending to individuals remains depressed, although not as much as it was in 2022. Meanwhile, the factoring market has almost reached pre-crisis levels this year.

As of April 30, 2024, the State Register of Financial Institutions comprised 127 unions. The market is highly concentrated, as 27 credit unions hold 80.3% of all assets and 84.4% of all deposits.