Ukrainian bank sector to remain loss-making in 2016

The banking sector in Ukraine will remain loss-making in 2016, the National Bank of Ukraine (NBU) has said in a first financial stability report posted on the central bank's website.

"The banking sector will remain loss-making in 2016 due to large provisions for reserves to cover losses from credit transactions. The restoration of profit-making by banks is expected no earlier than 2017," the NBU said.

According to the report, since early 2014, almost 80 banks (over one third of their total number) were removed from the market: the share of their assets of the entire bank sector early 2014 was around 30%.

Refunding of deposits by the Individuals' Deposit Guarantee Fund has exceeded UAH 70 billion and UAH 16 billion has been received from paying credits and selling assets of insolvent banks.

According to the report, 20 largest banks in 2016 are to have capital adequacy at 4% and regulatory capital adequacy at 5%.

The central bank permitted to have capital adequacy at 10% by late 2018.

"Banks that would not be able to implement the additional capitalization program would be declared insolvent," the NBU said.