The volume of mortgage lending in January-March 2021 amounted to UAH 1.4 billion, which is two times more than in the same period in 2020, according to the results of a survey of banks conducted by the National Bank of Ukraine (NBU).
According to the report, in the first quarter of this year, 1,811 mortgage agreements were concluded, which is 51% more than in the same period last year.
According to the regulator, in March 2021 banks issued 750 loans for a total of UAH 577.4 million, which is 26% more compared to February 2021 and almost 2.5 times more than in March 2020. The number of new deals for the month increased by 22%, for the year – by 83%, the report says.
Almost 90% of mortgage agreements in the amount of UAH 506 million in March were drawn up with five banks, which indicates the concentration of the mortgage lending market.
The NBU noted that the growth of mortgage lending is mainly due to loans for the purchase of housing in the secondary real estate market. In particular, in March, the volume of loans issued for the purchase of housing in the secondary market compared to February 2021 increased by 28%, or by UAH 109.2 million, in the primary market – by 15%, or by UAH 10.3 million.
According to the survey results, the share of mortgage agreements for the purchase of housing in the secondary market in March amounted to 87% of all loans issued.
According to the banks’ information, the average size of a loan for the purchase of housing continues to grow, in particular, in February it amounted to about UAH 742,000, and in March – UAH 770,000. The average size of a new mortgage loan for the purchase of primary real estate in the reporting month amounted to UAH 837,000, and the secondary one – UAH 760,000.
It is indicated that in March the average effective rate of a mortgage loan remained almost unchanged: in the secondary market it was 14.0% (in February – 13.9%), in the primary market – 17.4% (in February – 17.1%).
As reported, the volume of mortgage lending in 2020 amounted to UAH 3.8 billion, which is 36% more than in 2019.
The number of banks expecting an increase in the volume of their loan portfolio over the next 12 months amounted to 78% for the corporate segment and 82% for lending to the population, according to the results of a survey conducted by the National Bank of Ukraine (NBU) on the conditions of bank lending.
“The survey participants positively assess the prospects for lending in the next 12 months: 78% of respondents predict the growth of the loan portfolio of corporations, 82% of households. These are the highest estimates of the growth of the loan portfolio of the population since 2015, however, some large banks expect a certain deterioration in its quality,” the review says.
According to the report, the optimism of the respondents regarding the further increase in funding has grown, in particular, 77% of respondents expect an increase in household deposits, 78% – funds of enterprises.
The banks note that despite expectations of the introduction of new quarantine restrictions, the demand for loans increased from business and the population, in particular, the demand for mortgages was the highest in the entire history of observations.
It is indicated that in January-March 2021, the demand for business loans increased, primarily for loans to SMEs, in hryvnias and long-term loans.
The main factors behind the revival of demand are still cited by banks as a decrease in interest rates, the need of enterprises for capital investments and working capital, as well as debt restructuring.
The banks explain the softening of the creditworthiness for business by the high level of liquidity, increased competition with other banks, as well as improved expectations regarding the overall economic activity and the development of certain industries, primarily for SMEs.
According to the survey, almost a quarter of the surveyed respondents noted an increase in the level of approval of applications for business loans and easing requirements for the size of the loan.
It is indicated that 92% of financial institutions rated the debt burden of household borrowers as average, and more than 80% of financial institutions also rated the debt burden of corporate borrowers.
The survey was conducted from March 19 to April 9, 2021 among credit managers of 23 banks, whose share in the total assets of the banking system of Ukraine is 88%.
The volume of mortgage lending in February 2021 amounted to UAH 457.9 million, which is 40% more than in January and 81% more than in February 2020, according to the results of a survey of banks conducted by the National Bank of Ukraine (NBU).
According to the report, 617 mortgage loans were issued in February, which is 39% more than a month earlier and 35% more than in the same period last year.
According to the survey, almost 89% of mortgage agreements in the amount of UAH 380 million in February were drawn up with five banks, which indicates the concentration of the mortgage lending market.
The NBU noted that in February, the volume of issuance for the purchase of primary real estate increased by 13% or UAH 7.7 million, to UAH 66.9 million, and on the secondary market – by 47% or UAH 124.2 million, to UAH 388.45 million.
According to the survey results, the secondary market continues to dominate significantly in terms of the number and volume of lending, in particular, the share of mortgage agreements for the purchase of housing in the secondary market in February amounted to about 85% in terms of all new loans.
In the reporting period, the average effective rate of mortgage loans in the secondary market was 13.9% (in January – 13.8%), and in the primary market – 17.1% (in January -15.9%). A noticeable increase in the cost of loans in the primary market in February was due to an increase in the share of new loans in the market of one of the banks active in mortgage lending, which offers borrowers a relatively high effective interest rate, the regulator explained.
According to the NBU, in a regional context, most mortgage loans in February were issued in Kyiv – 171 agreements totaling UAH 177 million (39% of the total), in Kyiv region – 84 agreements totaling UAH 78.5 million (17%), in Kharkiv region – 76 contracts for a total amount of almost 43 million UAH (9%), in Lviv region – 36 contracts for a total amount of UAH 28.3 million and in Dnipropetrovsk region – 45 contracts for a total amount of UAH 24.2 million.
The European Bank for Reconstruction and Development (EBRD) has provided a four-year loan of EUR7.5 million to Bank Lviv for lending to small and medium-sized enterprises (SME) under the EU4Business program, Anton Usov, the EBRD senior adviser on external affairs, has said.
“Small and medium-sized enterprises in western Ukraine will benefit from a new loan of up to EUR7.5 million to Bank Lviv provided under the EBRD EU4Business credit line. The loan will be available for disbursement in the Ukrainian hryvnia, which will protect Bank Lviv’s borrowers from foreign currency-related risks, and offer long maturities,” the EBRD noted.
“The funds are provided in the context of the Deep and Comprehensive Free Trade Agreement (DCFTA) between the European Union (EU) and Ukraine. EU grants will be offered as investment incentives to eligible enterprises to reduce the cost of their capital expenditure on upgrades of technology and production processes to comply with EU standards and regulations,” it said on its website.
Bank Lviv is a regional bank providing banking services to SMEs and private clients across western Ukraine. It is well established in Lviv, Ivano-Frankivsk, Lutsk, Rivne, Ternopil and Uzhgorod regions, as well as Kyiv.
The EBRD is a leading institutional investor in Ukraine and to date has committed more than EUR14.54 billion in over 460 projects to the country.
Ukraine’s Verkhovna Rada has passed at first reading bill No. 1055-1 on lending state-owned and municipal property, envisaging the lending of this type of property via the e-auction system.
An Interfax-Ukraine correspondent has reported that the bill was backed by 263 MPs on Thursday.
“The Verkhovna Rada today adopted bill No. 1055-1, which will finally allow creating fair competition and fully opening up this market. Perhaps the story is familiar to many city dwellers: no one knows who and for what money, what “matchmakers” and “godfathers” rent premises in the middle of the city for UAH 1, to whom the high-rise complex of a plant is rented. All this is now a thing of the past,” First Deputy Minister of Economic Development, Trade and Agriculture Pavlo Kukhta said on his Facebook page, commenting on the adoption of the bill.
He said that according to the document, state-owned and municipal property should be leased according to the results of electronic auctions to those who offered the highest price.
In addition, a unified database of state-owned and municipal property leased will be created.
“By October 1, 2020, all existing lease contracts, even those that were concluded under the old law, will be entered to the electronic trading system @ProZorro.Sales with free access to data,” he added.
The pace of growth of retail lending in Ukraine in 2019 could be 30-40%, according to bankers polled by Interfax-Ukraine. “In 2019, consumer loans will remain the main component and driver of growth in the loan portfolio of banks and the main direction of retail lending: they now form more than 80% of all retail loans in hryvnias. The growth rate of retail loans may reach 40%, the most dynamic growth will remain in short term loan segments – up to one year, as well as from one to five years,”, Deputy Board Chairman, Director for Retail Business at Credit Dnepr Bank Oleh Pakhomov said.
Pakhomov said that in 2019, GDP growth is expected to slow down to 3% from 3.2-3.5% in 2018, while the consumer segment will be again the driver rather than the real economic sector. At the same time, inflationary dynamics forces the NBU to maintain a tight monetary policy, raising the refinancing rate and thus increasing the cost of the hryvnia resource in the market. In these circumstances, banks will still prefer to place part of their resources not in credit programs, but in risk-free operations with deposit certificates and government bonds.
Board Chairperson of IBOX Bank Halyna Kheilo said that the growth rate of lending to the population in 2019 could reach 30%.
Head of the RwS Bank’s lending department Natalia Holub said that retail lending will grow by 30% next year.
“Given that the average loan term for retail products is two years and the outlined pace, the growth of the retail loan portfolio in 2019 will be 12-15%, and the volume of retail lending will grow by 30%,” she said.
Deputy Board Chairman for Retail Business at FUIB Sebastian Rubaj said that the portfolio of retail lending to banks will grow by approximately 15%.
Director of Retail Banking at Ukrgasbank Oleh Kliapko said that in 2019, the focus of retail lending will shift to high-margin products with short turnarounds. Priority areas will be cash loans and credit cards.
Bankers believe that retail loan rates in 2019 will remain high.
