The National Bank has expanded lending opportunities for businesses and individuals
4 May 13:19
The National Bank of Ukraine has updated the rules for banks’ credit risk assessment. The regulator has eased a number of requirements for determining default, revised certain risk coefficients, and allowed banks to apply internal assessment models more flexibly. This was announced by the National Bank of Ukraine, according to "Komersant Ukrainian"
The National Bank explained that the decision was made following an analysis of banks’ operations under martial law and consultations with the banking community.
Since the start of full-scale war, banks have been operating under heightened risks: some borrowers have lost income, and businesses have suffered from hostilities, logistical problems, and economic instability. Therefore, the regulator revised its approaches to credit risk assessment to preserve financial stability while not hindering lending to the economy.
What requirements has the NBU eased?
The key changes cover several areas.
Recognition of default following restructuring
The NBU has eased the conditions for recognizing default for:
- individuals;
- individual entrepreneurs;
- borrowers following debt restructuring.
This means that banks will be able to assess situations more flexibly when a client has had payment difficulties but resumes loan servicing after restructuring.
Mortgage loans: lower default rates
Separately, the National Bank has lowered the probability of default rates for mortgage borrowers.
This may be important for banks engaged in residential lending. A lower calculated risk allows for lower provisions on such loans, and thus—potentially more active issuance of new mortgage loans.
Interbank transactions and resident banks
The NBU also revised the risk parameters for:
- resident banks;
- interbank transactions;
- certain types of banking exposures.
This should make the risk assessment approach more accurate and better aligned with the actual state of the banking system.
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Banks’ internal models: greater flexibility
Another important change is allowing banks to apply lower credit risk values based on agreed-upon internal methodologies.
In other words, banks with high-quality borrower assessment systems and internal risk management models will be able to utilize them more actively. This brings Ukrainian banking practices closer to more modern risk assessment approaches.
According to the NBU’s estimates, the changes will reduce the total amount of credit risk by approximately UAH 750 million.
In effect, this means that banks will be able to free up a portion of capital that previously had to cover regulatory risks. These resources can be directed toward new lending to businesses and households.
How this could affect businesses
For businesses, these changes could mean better access to financing. Banks will have more leeway to issue loans, especially to companies with stable operations that may have previously fallen under strict risk criteria due to wartime conditions or debt restructuring.
Potentially, this could help businesses:
- replenish working capital;
- finance production;
- repair damaged assets;
- invest in development;
- maintain jobs.
What this means for the public
For individuals, the changes could have a positive impact primarily on mortgages and consumer lending. If banks can assess risks more accurately and set aside fewer reserves for specific loan categories, this could expand the range of credit products available.
However, this does not mean an automatic, widespread reduction in loan costs. Rates will continue to be influenced by inflation, the cost of funds for banks, war risks, household income, and the bank’s own policies.
The NBU has extended the transition period for banks
The National Bank has also extended the deadlines for implementing certain requirements regarding the updating of banks’ internal policies and the calculation of credit risk.
The regulator explains this by the complexity of adapting new approaches within the system for managing non-performing assets. In other words, banks will have more time to update their internal documents, processes, and risk assessment models.
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