Functioning of the banking system of Ukraine during the war

Abstract

The purpose of this article is to outline the financial situation of Ukraine during the ongoing war with Russia and to show the actions of the National Bank of Ukraine to preserve and ensure financial stability in emergency conditions. The article indicates the impact of the war on the financial state of the economy and the banking sector. The state of the Ukrainian economy, as well as the banking sector, as the basis of the financial system, is characterized. Threats and challenges, risks inherent in the activities of financial service providers – banks are indicated, attention is focused on credit risk. Changes in bank balance sheets in terms of assets and liabilities in foreign currency in recent years (2018–2022) were considered, the main reasons for the deterioration of the quality of the loan portfolio and the reasons for the reduction of the loan portfolio were noted. An analysis of non-performing assets of banks and the reasons for their increase was carried out. The reports of the National Bank of Ukraine and the State Statistics Service of Ukraine were used for the analysis. The following priority directions of NBU activity for 2023 have been identified: credit risk and liquidity risk management; capital; maintaining business models and internal management, including ensuring the continuity of operation of bank branches under martial law. The need for global efforts to restore the economy and financial system of Ukraine after the end of the war is substantiated.