What happened
In a large accounting operation that flew under the headlines, PrivatBank stopped recognizing about UAH 140 billion of old non-performing hryvnia assets. According to the National Bank of Ukraine, this reduced the share of NPLs in the bank's portfolio from roughly 44% to 8% — for the first time since the 2016 nationalization PrivatBank has lost its status as the "leader" by share of non-performing loans.
"As of 1 February 2025 the share of non-performing loans in the banking sector stood at 13.9%."
— National Bank of Ukraine
Consequences for the system
These are not just numbers on a balance sheet. A reduction of NPLs at a large bank eases part of the systemic pressure on the financial sector: it lightens provisioning requirements, may free up resources for new lending, and improves the metrics by which international partners assess risk. At the same time, the shift of "leadership" by NPL share to the bank "Alyans" (47.8%) and by volume to Oschadbank (UAH 44.17 billion) underlines inequality in the sector: state-owned banks remain more lagging in indicators of problem assets.
Who benefits — and who doesn’t
The primary beneficiaries of this move will be customers and the economy, if the reduction in NPLs is transformed into accessible loans for businesses and households. According to the NBU, the NPL share in private banks is 8.4%, in banks with foreign capital — 6.5%, and in state-owned banks — 19.6%. For business loans the NPL share is 17.0%, for household loans — 10.8%.
The rules have changed: what will now be considered an NPL
New rules, effective from 1 January 2025, narrow or, more precisely, standardize the criteria by which loans are classified as non-performing. NPLs now include:
- loans with a default event — overdue more than 90 days or inability to repay on time without realising collateral;
- assets that were originally discounted (acquired or created);
- restructured loans that, after cessation of being recognized as non-performing, underwent a repeat restructuring or have overdue payments of more than 30 calendar days.
What’s next
In the short term this improvement in PrivatBank’s metrics strengthens the sector on paper and creates potential for a revival in lending activity. But the long-term effect will depend on two things: whether the "cleaned" balance sheet turns into real loans for the economy, and whether transparency in accounting for problem assets is maintained across all bank groups — especially in the state sector. Analysts warn that without strict supervision and a concrete plan to work with problem assets the risks will return.
Question to discuss: will this signal to investors and partners that the Ukrainian banking system is ready to resume lending, or is it merely an accounting operation that temporarily eased the statistics?
