Loan portfolio of ukrainian banks

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Loan portfolio of ukrainian banks

Shylo Vladyslav Mykolayovych Master's student of the Department of Finance, Banking and Insurance, Zaporizhzhya National University, Zaporizhzhia

Kisilova Inna Yuriyivna Candidate of Physical and Mathematical Sciences, Associate Professor, Associate Professor of the Department of Finance, Banking and Insurance, Zaporizhzhia National University, Zaporizhzhia

Abstract

loan portfolio bank

Formation of a balanced loan portfolio is one of the main directions in the activities of a commercial bank, which makes it possible to clearly define the tactics and strategy of development of a commercial bank, to assess and forecast the possibilities of lending to customers and the development of business activity in the market. The credit policy of a commercial bank is a set of certain actions and measures of a commercial bank to solve strategic and tactical problems.

Credit strategy at the level of an individual bank is determined by the choice of customers and credit instruments; norms and rules that regulate the practical activities of bank personnel; the competence of the bank's management and the level of qualification of the personnel involved in lending.

The purpose of the bank's credit policy is to create high-quality assets that provide a constant planned level of profitability; investment of credit funds in economically promising, profitable projects; development and active implementation of new credit technologies, credit products and services; strengthening and increasing competitiveness in the market; improving the quality of services provided.

The main objectives of the bank's credit policy are: ensuring highly profitable placement of the bank's funds; constant control over the structure of the loan portfolio and its qualitative composition; provision of reliable and cost-effective loans, minimization and diversification of credit risks.

The structure of the loan portfolio can be considered in the context of the main groups of borrowers - legal entities and individuals, lending currency and loan terms. The loan portfolio occupies a significant place in the assets of Ukrainian banks. The dynamics of the loan portfolio of Ukrainian banks has been analyzed, changes in the volume of the loan portfolio and the share of non-performing loans have been determined. It is shown that the growth of the volume of the loan portfolio is associated with an increase in loans in foreign currency. The problems of managing the loan portfolio of Ukrainian banks, in particular, the high share of problem loans in the corporate sector, have been identified.

Keywords: loan portfolio, commercial bank, loan portfolio formation, problem debts.

Шило Владислав Миколайович магістрант кафедри фінансів, банківської справи і страхування, Запорізький національний університет, м. Запоріжжя

Кисільова Інна Юріївна кандидат фізико-математичних наук, доцент, доцент кафедри фінансів, банківської справи і страхування, Запорізький національний університет, м. Запоріжжя

КРЕДИТНИЙ ПОРТФЕЛЬ БАНКІВ УКРАЇНИ

Анотація

Формування збалансованого кредитного портфеля є одним із основних напрямків у діяльності комерційного банку, що дає можливість чітко визначити тактику та стратегію розвитку комерційного банку, оцінити та прогнозувати можливості кредитування клієнтів і розвитку ділової активності на ринку.

Кредитна політика комерційного банку являє собою сукупність певних дій і заходів комерційного банку, щодо розв'язання стратегічних та тактичних завдань.

Кредитна стратегія на рівні окремого банку визначається вибором клієнтів і кредитних інструментів; нормами і правилами, які регламентують практичну діяльність банківського персоналу; компетентністю керівництва банку і рівнем кваліфікації персоналу, який займається питаннями кредитування.

Метою кредитної політики банку є створення високоякісних активів, які забезпечують постійний плановий рівень прибутковості; вкладання кредитних коштів у економічно перспективні, рентабельні проекти; розроблення й активне впровадження нових кредитних технологій, кредитних продуктів і послуг; зміцнення і підвищення конкурентоспроможності на ринку; підвищення якості наданих послуг.

Основними завданнями кредитної політики банку є: забезпечення високоприбуткового розміщення коштів банку; постійний контроль над структурою кредитного портфеля і його якісним складом; надання надійних і рентабельних кредитів, мінімізація і диверсифікація кредитних ризиків.

Структуру кредитного портфелю, можна розглядати у розрізі основних груп позичальників - юридичних та фізичних осіб, валюти кредитування та термінів кредитування. кредитний портфель займає вагоме місце в активах українських банків.

Проаналізовано динаміку кредитного портфеля банків України, визначено зміни обсягу кредитного портфеля та частки непрацюючих кредитів. Показано, що зростання обсягу кредитного портфеля пов'язане із збільшенням кредитів в іноземній валюті.

Ключові слова: кредитний портфель, комерційний банк, формування кредитного портфеля, проблемна заборгованість.

Statement of the problem. In the context of an unstable economic situation, it is important to maintain the functioning of the banking system of Ukraine as a guarantee of stable economic development and counteraction to crisis phenomena. An important aspect of banking is the lending activity of banks. From this point of view, the problems of an effective process of formation and management of the loan portfolio of a commercial bank are of particular relevance.

Analysis of the latest research and publications.Important aspects of formation, evaluation and management of the bank's loan portfolio are highlighted by such Ukrainian scientists as Govorukha S., Kremen O.I., Kramarenko I.S., Pashkov A., Vovk V., Khmelenko O., Serik Y.V., Yermolenko K.V., Kryuchko L.S., Sydorenko A.V. and others. However, it is necessary to comprehensively consider and systematize issues related to the formation of the bank's loan portfolio.

The aim of the article is to study the features and mechanisms of formation of the loan portfolio of Ukrainian banks in modern conditions.

Statement of the main material. As noted by Govorukha S. [1], a bank portfolio is defined as a system of assets and liabilities of a bank, which in turn consists of a portfolio of active and a portfolio of passive operations of the bank. Active, in particular credit operations, are the most important source of profit, and make up the majority of the bank's portfolio of active operations and are an integral object of management, which is characterized by specific features.

On the other hand, a loan portfolio is usually understood as a certain number of bank loans, which are structured according to certain criteria, which, in turn, are determined by the objectives of the credit policy determined by the bank. Table 1 summarizes the researchers' approaches to the definition of the concept of «loan portfolio».

Thus, it can be seen that there is a consensus among scholars on the interpretation of the concept of "bank loan portfolio".

Depending on the characteristics of the portfolio, the following types can be distinguished (Table 2) [9]:

Table 1

Types of loan portfolios and their characteristics

Table 2

Approaches to the definition of the concept of "loan portfolio"

Formation of a balanced loan portfolio is one of the main directions in the activities of a commercial bank. This makes it possible to clearly define the tactics and strategy for the development of a commercial bank, to assess and predict the possibilities of lending to customers and the development of business activity in the market.

The main tasks of forming a loan portfolio of a commercial bank are shown in Fig. 1 [9]:

Fig. 1 Key tasks offorming a loan portfolio of a commercial bank

Thus, the structure and quality of the loan portfolio significantly affect the reliability, reputation and financial results of a commercial bank, in addition, the availability of an optimal and high-quality loan portfolio determines the bank's liquidity.

Kryuchko L.S., Sydorenko A.V. [10] define the credit policy of a commercial bank as a set of certain actions and measures performed by a commercial bank, the main purpose of which is to solve strategic and tactical tasks, which are based on microeconomic, macroeconomic, regional and sectoral factors in the field of optimizing the profitability of credit operations and possible credit risk.

An effective and optimal credit policy makes it possible to rationally regulate, manage and organize relations between the bank and its customers regarding the movement of funds.

The credit strategy at the level of an individual bank is determined by: the choice of customers and credit instruments; norms and rules that regulate the practical activities of bank personnel; the competence of the bank's management and the level of qualification of the personnel involved in lending.

In the current conditions of economic instability, the complexity of managing the loan portfolio of a commercial bank is due to the diversity of its components, the dynamics of the external environment, the phase of the economic cycle and the general market conditions. However, it should be noted that the implementation of effective and optimal methods of managing the loan portfolio requires a comprehensive assessment of its effectiveness. The carried out review of existing approaches to determining the generalized assessment of the loan portfolio allowed to determine that the key indicators are the criteria of profitability, riskiness and liquidity.

The bank's strategy for managing the loan portfolio is necessary for the bank, as well as for the dynamics of the loan portfolio and the effectiveness of the loan portfolio on the basis of the analysis of the vitrates for the implementation of the project, and the investment in the development of the loan portfolio , the period її zdiysnennya, the folding of the applied method, the development of the name of the rizikiv, the impact on the value of the bank (devaluation of the hryvnia, the growth of the tempo of the market), the introduction of methods on the reputation of the bank, Implementation of internal riziks, guaranteed results.

It should be noted that the development of a credit strategy ensures [11]:

the implementation of long-term goals for the future development of divisions and the bank as a whole;

conducting a real assessment of the bank's credit capabilities, ensuring the maximum use of its credit potential and the possibility of maneuvering credit resources;

rapid implementation of promising areas of lending;

forecasting and prediction of possible variations in the development of external uncontrollable factors;

reflection of the bank's superiority in the sphere of credit activity in comparison with its competitors;

formation of the relationship between strategic, current and operational management of the bank's credit activities;

formation of values of the main criterion assessments of the choice of real projects for crediting and lending instruments;

increase in the number of bank customers. It should be noted that the formation of the bank's credit strategy takes place in stages, although it should be noted that the stages of this process are conditional.

On the other hand, structuring the process of forming a credit strategy allows you to identify errors in the stages and prevent their impact in time (Fig. 2).

The purpose of the bank's credit policy is to create high-quality assets that provide a constant planned level of profitability; investment of credit funds in economically promising, profitable projects; development and active implementation of new credit technologies, credit products and services; strengthening and increasing competitiveness in the market; improving the quality of services provided.

The main objectives of the bank's credit policy are: ensuring highly profitable placement of the bank's funds; constant control over the structure of the loan portfolio and its qualitative composition; provision of reliable and cost-effective loans, minimization and diversification of credit risks.

Fig. 2 Organizational model of formulation and implementation of credit strategy for a bank [12]

Let us analyze the structure and dynamics of the credit portfolio of Ukrainian banks. According to the National Bank of Ukraine [13], the loan portfolio of Ukrainian banks in 2022 decreased by 1.4% to UAH 1.134 trillion, while the volume of non-performing loans (NPLs) increased by 25.2%, or by UAH 87 billion to UAH 432 billion. According to it, the share of non-performing loans in the country's banking system increased to 38.12% last year from 30.02% a year earlier.

At the same time, it was clarified that in December 2022, the loan portfolio of the country's banks decreased by 3%, and the volume of NPLs increased by 0.6%. The share of non-performing loans increased by 1.37 percentage points during the month.

According to the National Bank, over the month, the portfolio of loans in the corporate sector decreased by 2.6% to UAH 847.586 billion (while the volume of NPLs in it increased by 2.8% to UAH 353 billion), and the portfolio of loans issued to individuals decreased by 6.2% to UAH 224.26 billion (NPLs in it decreased by 8.5% to UAH 68.272 billion).

In addition, the volume of interbank loans increased by 11.1% to UAH 36.9 billion (NPL decreased by 11.5 times to UAH 4 million). The volume of loans issued to state authorities and local governments decreased by 4.5% to UAH 24.8 billion (NPL increased by 2.2 times to UAH 507 million).

According to the NBU, in December 2022, the share of NPLs in the portfolio of loans granted to the corporate sector increased by 2.4 percentage points (pp) to 42.87%, while the share of retail loans decreased by 1.6 percentage points to 30.44%, interbank loans by 0.13 percentage points to 0.01%, and the share of loans to public authorities increased by 1.14 percentage points to 2.04%. The regulator's report also notes that the loan portfolio of state-owned banks (excluding PrivatBank) in December decreased by 3.1% to UAH 350.599 billion (the volume of NPLs in it increased by 5.9% to UAH 144.2 billion). At the same time, PrivatBank's loan portfolio decreased by 3% to UAH 258.5 billion (NPLs in it decreased by 4.9% to UAH 178.929 billion). In addition, the loan portfolio of banks with foreign capital for the month decreased by 1.3% (to UAH 315.381 billion), and with private capital - by 5.4% (to UAH 209.051 billion).

At the same time, the volume of NPLs in foreign banks increased by 5.5% (to UAH 59.627 billion), and in private banks - by 1.35% (to UAH 49.344 billion) [13].

In addition to the structure of the loan portfolio, it is possible to review the main groups of borrowers - legal and financial assets, currency crediting and credit terms. At the same time, the banking system of Ukraine has priority over the obligations of crediting legal axis from the national currency to the consumers of circulating capital (Table 3) [14].

Table 3

TOP-10 banks of Ukraine in terms of loans to individuals and legal entities

An important task was to overcome the two biggest problems of the banking system, which were the main cause of losses during the last crisis - related party lending and excessive concentration of loan portfolios. And while the first problem has actually been eliminated, the share of domestic business groups in the gross

portfolio of the banking system is sometimes prohibitively high. Banks, especially state-owned ones, cannot get rid of the legacy of bad debts of business groups.

However, they recognized credit losses on most of these loans and made provisions. In order to reduce the credit risks of the portfolio, over the past few years, the NBU has been actively working to improve credit standards, transparency and reliability of the assessment of corporate borrowers. In particular, the requirements for credit risk assessment are closer to the recommendations of the Basel Committee on Banking Supervision, concentrations of large borrowers and transactions with related parties are limited, and annual stress testing of the largest debtors has been introduced. All this encouraged banks to lend to high-quality borrowers with a transparent ownership structure and sources of income

It can be seen (Fig. 2) that the loan portfolio occupies a significant place in the assets of Ukrainian banks, since the growth of lending directly affects the growth of the bank's assets.

Fig. 2 Share of the loan portfolio in the assets of Ukrainian banks in 2013-2021, UAH million [15]

The increase in the loan portfolio for the analyzed period is associated with a significant share of loans in foreign currency. Due to their constant revaluation at

the official exchange rate, there is an artificial increase in the hryvnia equivalent of both the loan portfolio and assets as a whole.

However, due to the COVID-19 pandemic and hostilities, the demand for loans by both businesses and households declined, despite the further reduction in the cost of loans. As a result, there was a decrease in the banks' loan portfolio. It should be noted that the highest amount of bad debts continues to be held on the balance sheets of state-owned banks (UAH 310.2 billion or 57.4% of the loan portfolio). The volume of non-performing loans of banks with foreign capital and private Ukrainian capital is UAH 95.9 billion and UAH 24.0 billion, respectively (Fig. 3) [15].

Analysis of the loan portfolio of banks of Ukraine showing, as of 01.01.2023, the largest loan portfolio of Oschadbank (UAH 83.2 billion), Ukreksimbank (UAH 83 billion), Privatbank (UAH 71.4 billion), Ukrgasbank (UAH 65.3 billion), Raiffeisen Bank (UAH 61.8 billion), the largest loan portfolio of legal entities to Ukreksimbank (UAH 82.9 billion), Oschadbank (UAH 71.74 billion), Ukrgasbank (UAH 61.4 billion), Raiffeisen Bank (UAH 57.37 billion), FUIB (UAH 33.9 billion). The largest loan portfolio of financial assets belongs to Privatbank (UAH 43.22 billion), Universal Bank (UAH 17.6 billion), Sense Bank/Alfa-Bank (UAH 13.2 billion), Oschadbank (UAH 11.5 billion), FUIB (UAH 9.9 billion). (Tab. 4) .

Fig. 3 Share of NPLs of Ukrainian banks in 2018-2021,

Table 4

Rating of banks . by volume of loan portfolio as of 01.01.2023р.

It can be seen that the loan portfolio of individuals in the banking system decreased by UAH 30 billion during the year. The consumer activity of individuals is depressed. Therefore, there is a process of consistent (month-to-month) reduction of individuals' debt on UAH loans, both mortgage and consumer [15]. This is a consequence of the gradual repayment of debt by borrowers and the write-off of bad debts for losses due to the formation of reserves by banks. At the same time, 7 banks have increased their portfolios, these are: Unex, RVS, Concord, Vostok, Creditwest and Sky. FUIB, Sens, OTP Bank, Ukrsibbank, Kredobank, Credit Agricole, and Privatbank have reduced their portfolio the most.

During 2023, there is also a systematic decrease in the loan portfolio of legal entities in hryvnia, which reached almost UAH 15 billion over the year.

Lending is mainly provided to banks with the state's participation in the capital and under the "5-7-9%" programs, where the state assumes part of the interest costs of borrowers. An increase in lending was observed in the spring during the sowing campaign, after which the loan portfolio in both hryvnia and foreign currency decreased from month to month.

The rating of Ukrainian banks by the level of assets, the indicator of instant liquidity and the share of non-performing loans is given in Table. 5 [15].

Rating of Ukrainian banks in 2023

Table 5

It can also be noted that the problems of managing the loan portfolio are a high share of non-performing loans in the corporate sector, sectoral imbalance in the areas of lending, low margin of loans, inefficient structuring of loan agreements, concentration of investments in government securities.

Conclusions

Analysis of the processes of formation of the loan portfolio of Ukrainian banks makes it possible to recognize negative trends in lending, to make decisions on improving their structure, to determine the most acceptable strategy for the bank in the implementation of credit policy. However, in the current conditions, certain negative phenomena are observed in the credit market, which indicate a deterioration in the quality of the banks' loan portfolio due to a decrease in the solvency of customers and the crisis situation in the country as a whole.

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