National Bank of Ukraine expecting banks' loan portfolio to grow 20-25% in 2025

MOSCOW. June 17 (Interfax) - The National Bank of Ukraine is expecting banks' loan portfolio to grow 20%-25% in 2025, which will allow balancing investments in foreign-currency government bonds, Ukrainian media quoted National Bank of Ukraine First Deputy Chairperson Yekaterina Rozhkova as saying.

"We are expecting the loan portfolio to be growing around 20%-25% in 2025, which will allow balancing investments in foreign-currency government bonds," the media quoted Rozhkova as saying in a presentation of the financial stability report on Tuesday.

The share of the loan portfolio is growing in the structure of bank balances, and the regulator is hoping this trend will continue, she said.

"Judging by the analysis of the real sector and balances of enterprises, we can see that the vast majority of businesses are in good shape in terms of business credit metrics such as business solvency, debt to revenue ratio, and debt servicing expense to income ratio," Rozhkova said.

This proves that businesses have adapted and recovered, in particular, owning to support through state programs. As a result, most enterprises look attractive to banks as potential borrowers, she said.

She said at the same time that consumer demand is not enough for rapid economic growth, and the key role is now played by the willingness of businesses to invest in production. The state is also a significant source of solvent demand.

"Now all the conditions are available in the market and the banking sector, which can provide credit support, wants and has the resources to do so. According to a bank survey, demand for loans from businesses is growing roughly 30%," Rozhkova said.

The regulator is observing an increase in the share of loans with a term of one to three years in the loan portfolio of banks, which indicates an increase in the volume of longer-term financing that often has an investment nature, she said.

As reported, members of the National Bank of Ukraine's Monetary Policy Committee stated an increase in interest rates on loans to businesses but said they remained at pre-COVID levels, and bank loan portfolios continued to grow steadily.

According to the National Bank of Ukraine, the volume of loans increased by 1.8%, or by UAH 21 billion, to UAH 1,186 trillion, while deposits decreased by 0.4%, or by UAH 10.3 billion, to UAH 2.804 trillion in May.