Survey: Ukrainian banks show record optimism in business lending

The expectations of Ukrainian banks about lending to businesses and households have reached a new high since 2015, with the country’s banking industry expecting a revival in business lending, the National Bank of Ukraine (NBU) has found in its latest survey.

According to the Ukrainian central bank’s report, 74 per cent of respondents expect an increase in both corporate and retail loans, rating the prospects for resuming lending to businesses at 53 per cent, higher than in any corresponding observation over the last four years.

In addition, a record number of banks (62 per cent) predict an influx of deposits from households and individuals.

“Most of the financial institutions surveyed are convinced that the demand for loans to small and medium enterprises and consumer loans will continue to grow. At the same time, in accordance with the expectations of banks, credit standards will become softer for all types of corporate lending and, although not significantly, for consumer lending,” wrote Interfax Ukraine, quoting the NBU study.

At the same time, the surveyed banks also expect that foreign exchange risks might increase during the fourth quarter of the year, while credit risks will decrease and risks concerning banking liquidity and operations will remain largely the same.

The NBU’s analysts added that Ukrainian banks had seen an increase in demand for short-term loans to individual consumers, SMEs and larger companies, which was “mainly due to a decrease in the cost of borrowing, as first noted by banks since 2017.”