New NBU governor says he will renew crediting, reduce NPLs

Kyrylo Shevchenko declared the
renewal of crediting and maintaining macroeconomic stability as his top
priorities in his first press briefing on July 20 as the newly appointed
governor of the National Bank of Ukraine (NBU). Reducing the share of
non-performing loans in commercial banks is crucial for renewing crediting,
Shevchenko said. In addition, he said cooperation with international partners
will remain a top priority, as well as maintaining the NBU’s independence.

Shevchenko also mentioned that the commercial banks
should be “limited” in using long-term securities as this reduces their
liquidity, which could be used for lending. While answering journalists’
questions, he underscored that the NBU will maintain a floating exchange rate,
and the NBU will not regulate it as long as the exchange rate doesn’t go beyond
“acceptable limits”.

Evgeniya Akhtyrko: In
emphasizing the new policy of crediting the real economy by commercial banks.
Shevchenko was merely echoing the words of President Zelensky, who stressed
that “real loans for Ukrainian business and accessible mortgages for
individuals” are long-awaited things at the very same press conference
introducing the new central bank governor. It looks like enhancing accessible
loans is the latest one-off stunt by the Zelenskiy administration, which could
see this as a tool that might renew the public’s trust and stop the sliding poll ratings.

However, the extremely weak current conditions
of Ukraine’s economy makes the environment highly risky
for lending. And we don’t believe that Ukrainian business is able to offer many
competitive and profitable enterprises that would be worth crediting by
commercial banks at lower rates.

Instead, if banks are forced to relax their lending
criteria, Shevchenko is likely to face a swelling in the same non-performing
loans (NPLs) that he says he wants to eliminate.