IMPACT OF MARTIAL STATE ON THE PERFORMANCE OF THE UKRAINIAN BANKING SECTOR

Abstract

Banks of Ukraine in the conditions of martial law demonstrated rather contradictory, but mostly positive results. Despite significant economic and infrastructural losses, the banking system has preserved its integrity and reliably fulfils existing obligations, conducts settlements, and continues to attract customer deposits, but has switched to a conservative (zero) growth of loan portfolios, except for programs supported by the state, has slowed down the issuance of new loans due to high credit risks, and also postponed the implementation of plans to reduce the share of the public sector.The article presents a generalized description of the main components of the systemic risk of instability of the banking system based on a structural and functional analysis of its elements according to the official reports of the NBU for 2022 and previous years, as well as the prospects for its further development.It was determined that by the end of 2022, the banking system of Ukraine maintains an acceptable level of operational stability, excessive liquidity and tries to minimize the factors of credit, operational and currency risks. In the second half of 2022, credit risks began to materialize, which was manifested in the growth of defaults. Based on this, it was concluded that one of the important directions of the regulatory policy of the NBU should be the development of incentives for the quantitative and qualitative improvement of the financial base of the banking system.In particular, it is proposed to stimulate the growth of the funding, dominantly from the domestic market, and therefore to the levelling of currency and credit risk, as well as to the improvement of the effectiveness of the monetary policy. To ensure lending activity, it is advisable to develop lending support for ESG goals for diversification of energy production, housing and infrastructure construction.