Moderate hryvnia devaluation will not affect banks, say bankers

The devaluation of the hryvnia in the range of 10% will not have a systemic impact on the banking system, bankers said at the annual conference Ukrainian Banking Forum, organized by the Adam Smith Institute, held in Kyiv on November 12-14.

Thus, according to Bank Nadra board chairman Dmytro Zinkov, the banking system is now more resistant to the fluctuations of the exchange rate than three or five years ago.

"It seems to me that the portfolio [of bad loans] is quite resistant to the fluctuations of the exchange rate, the quality of service for some period could deteriorate, but this won't be critical for the overall balance of the banking system. In case of the hryvnia devaluation, exporters, as a rule, come to life, their business is growing, the size of foreign exchange earnings may increase," the banker said.

Zinkov also noted that it is premature to transfer to a floating exchange rate.

"The transfer to a floating exchange rate carries enormous risks for the country, because Ukraine has a dual-currency economy. This decision requires significant resources, the determination of actions and sufficient instruments," said the banker.

Ukrgasbank board chairman Serhiy Mamedov also believes that the 10% devaluation of the hryvnia exchange rate will not significantly affect the banks.

"I believe that the 10% devaluation of the hryvnia rate will not affect the banking system. If the figure is higher – it's risky," he said.