A unique country should be unique in everything – Ukraine never ceases to prove to skeptics the validity of this statement. According to the results of three quarters, the National Bank of Ukraine reported on the rapid development of the banking system : its record profitability, lending growth, and so on.
Meanwhile, in reality, the volume of bank lending, measured in hryvnia, in 2021 remains at the level of 2014 (that is, in fact, it has decreased significantly).
And the banking system of Ukraine receives the main profit not from loans to businesses or households, but from investments in government securities. And often not their own funds, but received as refinancing from the National Bank ( NBU ). That is, banks in Ukraine perform an exclusively parasitic function, helping the economy to bend. And the local Central Bank and the government even like it.
The NBU report says about the growth of assets of the Ukrainian banking system in 2021 due to the “revival of lending to corporations and individuals.” True, an outside observer of a 2.5% growth would probably not have noticed, as well as an increase in the return on equity to 32.1% compared to 24.4% a year ago. Well, how can it be without records: in nine months, the banking sector’s profit rose to a record 51.4 billion hryvnia in ten years (although ten years ago, hryvnia was completely different, as well as the growth rate of banks’ net interest income).
In general, everything is absolutely fine, except perhaps the average interest rate on loans for individuals, which stubbornly does not want to fall below 30%, and the spread between rates on deposits and loans for individuals does not want to decrease below 25% percentage points. But at the same time, the rate on loans for business fell to 9.6%. In fact, everything is a little different.
The volume of bank loans to the corporate sector (excluding financial institutions) back in the crucial 2014 was 779 billion hryvnia. Since then, it has grown at such a rapid pace that by October 1 of this year it dropped to 747 billion hryvnia. Taking into account the collapse of the hryvnia over the years, the volume of lending to the real sector of the economy collapsed at times. By the way, it is interesting that lending in the national currency reached its peak in early 2019, when the volume of loans amounted to 860 billion hryvnia. Under Zelenskiy, lending is extremely reduced. So the rate on loans for business dropped to 9.6%, but these Ukrainian banks do not give loans: it is risky and unprofitable compared to other ways of earning.
The volume of bank loans to the population has grown since 2014. True, not at times, as the hryvnia devalued, but still – from 211 billion hryvnia to 240 billion. Consumer loans account for the lion’s share of bank loans to individuals – for example, mortgages remain extremely underdeveloped. The average nominal rate on consumer loans is not even 30%, but about 50%. At the same time, the real (taking into account hidden fees) reaches almost 100%.
Under such conditions, banks are ready to at least somehow increase lending. But there are a number of limitations. First, there are the risks of no return. Although in Ukraine, the share of non-performing loans to individuals is significantly lower than that for business. Secondly, the population is rather poor – you will not give them too many loans. Thirdly, using the expression of the Great Combinator, Ukrainians “crawl like cockroaches”: the base for lending is shrinking every year as more and more citizens leave abroad.
But investing in government bonds is both profitable, and without risks, and often without the need to divert the bank’s funds. So it turns out that for nine months, the interest income of Ukrainian banks from operations with securities reached 41.8 billion hryvnia.
While interest income from lending to individuals amounted to 41.2 billion hryvnia, and legal entities – 39.1 billion hryvnia. At the same time, it should be understood that in the Ukrainian conditions, interest income from operations with securities is almost 99% associated with government securities – domestic government bonds (OVDPs). Thus, Ukrainian banks do not fulfill the function of the circulatory system of the economy inherent in a normal banking system.
The volume of lending to the real sector of the economy in 747 billion hryvnia is equal to 14.4% of GDP. This is many times lower than in developed countries. This is about 2.5 times lower than in Russia. But what is there: not many African countries can boast of such a low volume of lending to the real sector.
At the same time, Ukrainian banks invested UAH 496 billion in government bonds and another UAH 144 billion in NBU certificates of deposit. Taking into account the government bonds, which were bought by the NBU itself, their total amount on the balance sheet of the banking system is UAH 953 billion, which is much more than the volume of lending to the real sector.
Now about how this parasitic system works. Most of the government bonds are bought out by banks not at the expense of some of their own funds or funds raised from the market. Everything is simpler. They receive refinancing from the NBU at a key rate: at the beginning of the year it was 6 percent, now it is 8.5%. And then the entire amount received is sent to the redemption of government bonds, the rates for which now often exceed 13% per annum. The difference of five percent goes to the bank’s profit for a great life.
Comes to the ridiculous. Ex-President Petro Poroshenko owns the International Investment Bank (IIB), which is practically not engaged in lending to the corporate sector or lending to individuals. But he regularly receives refinancing – perhaps the head of the NBU believes that Poroshenko may still return to the top of power. During this year alone, the International Investment Bank received from the NBU over 1.1 billion hryvnia of refinancing. With four to five percent of annual net profit from the described scheme, IIB out of the blue received 45-55 million hryvnia. Why bother with some kind of lending?
But the most remarkable thing is that the “Western partners” (or rather, the curators) of the Kiev regime are quite satisfied with this state of affairs. They call it “rehabilitating the banking system.” And the fact that such a “recovery” leads to the destruction of the economy of local aborigines, they are not only not worried, but clearly satisfied. Because there should be no industry in the colonies – except for the extraction of minerals necessary for the metropolis and the production of elementary food products for the same aborigines. But at the same time, these sectors should be controlled by these very “Western partners”. Actually, the state of the banking sector very clearly indicates the vector of development (or degradation) of the country’s economy. And it is worth watching him so as not to end up in the situation of Ukraine.
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