Ukraine’s Banking System: Global Comparisons and Internal Financial Challenges

The Ukrainian banking sector remains a focal point for experts due to its unstable and conflicting situation.
According to financial analysts, the ratio of loans to deposits in the country is significantly lower than global averages, which contributes to slow economic growth and reduced investment activity.
The structure of obligations of Ukrainian banks is quite stable—over 90% of their liabilities consist of funds and deposits from individuals and businesses, indicating a high level of confidence in the financial system among the population and entrepreneurs.
However, banks allocate only about 40% of these attracted funds to issuing new loans, a figure much lower than global standards.
Data from the National Bank of Ukraine show that as of July 2025, resident deposits reached nearly 2.8 trillion hryvnias, while loans extended to residents amounted to only 1.2 trillion hryvnias—less than half of the deposits.
Additionally, the proportion of long-term loans exceeding one year is over 600 billion hryvnias.
Since the outbreak of war, the loans-to-deposits ratio has decreased almost twice—from 67.6% in 2021 to 39.4% in 2024, with a slight increase to 43% in July 2025.
This trend indicates a tightening of lending activities and a shift toward safer financial instruments.
The expert notes that the share of loans to individuals and businesses in banks’ net assets decreased from 36.1% to 26.3% over these years, while the share of government securities like OVDs slightly declined, and deposit certificates issued by the NBU and other financial instruments increased.
The primary reasons for this situation are the absence of targeted policies and incentives to stimulate lending, along with the strict monetary policy of the NBU and guaranteed income streams for banks from the state.
These factors, combined with high country risk levels, hinder the development of the financial sector and worsen the economic climate.
Globally, according to World Bank data, in 2021, the average ratio of bank loans to deposits across 127 countries was 89%, meaning that loans lagged behind deposits by 11%.
In Ukraine, by mid-2025, this ratio was only 43%, indicating that loans extended are more than twice less than deposits.
This situation hampers financial sector growth and economic stability.
Further details and analysis can be found through the author’s link.