The National Bank of Ukraine has estimated the growth of Ukraine’s real gross domestic product (GDP) in the third quarter of 2024 at 4% compared to the same period last year, while previously it had forecast it at 3.1%.
“The harvesting of late crops started earlier than last year and continues, which supported the agricultural performance in the third quarter. Stable operation of the sea corridor and loose fiscal policy also supported economic activity,” the NBU said in its Inflation Report published on its website.
The NBU noted that such a revision of the economic dynamics assessment in the third quarter made it possible to raise the GDP growth forecast for this year from 3.7% to 4%.
It is specified that at the end of the third quarter, the harvested area of late crops was 81% higher than last year, and the harvest volume was 68% higher, the volume of cargo transshipment for export in seaports increased 2.1 times in the third quarter of 2024 compared to the third quarter of 2023, and the volume of rail freight increased by 15%.
“As in previous quarters, investment demand made a positive contribution to GDP growth in the third quarter. In particular, it was supported by public capital investment in defense and related projects, such as weapons production, as well as disaster relief spending,” the NBU added.
He also emphasized the growth of private sector investment due to further improvement in the financial results of enterprises and their significant needs for energy-autonomous equipment given the difficult situation in the energy sector.
Explaining the slowdown in growth to 2.4% in the fourth quarter, the NBU cited earlier harvesting of late grains and oilseeds and their significantly lower yields compared to last year as one of the reasons for the negative contribution of agriculture to real GDP.
As for 2025, the NBU has improved its growth forecast for the first quarter from 1.8% to 2.3%, and for the second quarter from 2.8% to 3.4%, expecting growth to accelerate to 4.6% in the third quarter and 6.3% in the fourth quarter, whereas previously it had estimated growth of 5.1-5.9% for the second half of the year.
As a result, the overall GDP growth forecast for next year has been improved from 4.1% to 4.3%, and in nominal terms by UAH 100 billion to UAH 8.72 trillion, while this year’s estimate of nominal GDP was raised by UAH 40 billion to UAH 7.63 trillion.
“In the future, Ukraine’s real GDP growth will accelerate (to 4.3% in 2025 and 4.6% in 2026). This will be facilitated by maintaining a loose fiscal policy, revival of domestic demand, which will be supported by wage growth, increased harvests and stable external demand, as well as investments in recovery, in particular in the energy sector,” the NBU said.
At the same time, he emphasized that economic growth will be constrained by a shortage of labor, security risks, migration processes, and the slow normalization of economic conditions.
In the updated report, the NBU retained three key risks to the forecast (with a strong impact and a probability of 25-50%): a longer duration and intensity of the war, higher budgetary needs, and a greater energy deficit due to further damage to the energy infrastructure.
Among the negative risks with a high probability (25-50%), the NBU added the potential pass-through to prices of higher interest rates or additional taxes, although the NBU assesses its impact as moderate.
The impact of the risk of more intense and prolonged blocking of cargo traffic across the border with certain EU countries remains weak in the updated Inflation Report, with the probability decreasing to less than 15%.
The NBU added increased emigration to the risk of rising geopolitical tensions with a moderate impact and a probability of 15-25%.
In addition, the probability of a positive risk, i.e. the rapid restoration of damaged energy infrastructure, has been reduced from 15-25% to less than 15%.
“The balance of risks in the baseline forecast is shifted towards increased price pressure,” the NBU said.
As reported, Ukraine’s GDP, according to the State Statistics Service, grew by 5.3% in 2023 after a 28.8% decline in 2022, including 4.7% growth in the fourth quarter of last year. In the first quarter of this year, the State Statistics Service estimated GDP growth at 6.5%, and in the second quarter – at 3.7%.
State-owned PrivatBank in July 2024 reduced its net profit by 2.6% by June – to UAH 6.25 billion and with this indicator headed the top five most profitable banks in the country in July, according to the data of the National Bank of Ukraine (NBU) on its website.
According to them, Privat is followed by state-owned Oschadbank, which in July received 2.18 billion UAH of net profit compared to 0.07 billion UAH in June.
Universal Bank (mono) rounded out the top three, having almost eightfold increased its profit compared to June – up to UAH 0.84 bln.
It is followed by two banks with foreign capital: Credit Agricole and Raiffeisen Bank with UAH 0.62 bln (+28.3% to June) and UAH 0.56 bln (+78%) respectively.
The second five most profitable banks in July were headed by Ukrsibbank, which increased its net profit by 10.1% to UAH 0.55 bln. It also included: City Bank – UAH 0.54 billion, Ukrgasbank – UAH 0.43 billion, FUIB – UAH 0.42 billion and Ukreximbank – UAH 0.38 billion.
In July 2024, net profit of over UAH 100 million was received by three more banks: OTP Bank – UAH 365.3 million, Pivdennyi Bank – UAH 340.7 million and Kredobank – UAH 193.5 million.
At the same time, the three most unprofitable banks in July were formed by Sense Bank with net loss of UAH 65.67 mln, Alliance Bank – UAH 17.81 mln and Pravex Bank – UAH 13.34 mln.
The list of the most profitable banks in general for seven months of this year is also headed by Privat with a large gap – UAH 37.16 billion, followed by Oschadbank – UAH 11.00 billion.
Next in a denser group are Raif – UAH 4.87 billion, Ukrexim – UAH 4.74 billion, FUIB – UAH 4.24 billion, Credit Agricole – UAH 4.22 billion Ukrsib – UAH 3.97 billion and Ukrgas – UAH 3.73 billion.
Six other banks also received net profit over UAH 1 billion for 7 months of this year: mono – UAH 3.19 billion, OTP – UAH 3.00 billion, City – UAH 2.73 billion, Sense – UAH 2.21 billion, Pivdennyi – UAH 1.61 billion and Credo – UAH 1.16 billion.
A-Bank is a little short of this threshold – UAH 0.92 billion, while ProCredit Bank, which follows it, has a net profit of UAH 0.60 billion.
As for unprofitable banks, according to the results of January-July, there are 8 out of 62 banks in Ukraine. The worst indicator is Pravex Bank – UAH 95.79 billion, followed by Industrialbank – UAH 39.00 billion.
At the First Investbank and Motor-Bank, which were transferred to the state from the sub-sanctioned owners following the results of the trial, the net loss for 7 months amounted to UAH 25.69 mln and UAH 14.69 mln, respectively.
The National Bank of Ukraine (NBU) has authorized the purchase and transfer of foreign currency by resident legal entities that are e-commerce entities abroad to pay value added tax (VAT) on the purchase of goods from domestic producers by consumers from EU countries.
“The condition for these transactions is that the e-commerce entity must be registered as a taxpayer in the EU. This mitigation will primarily support small and medium-sized businesses that will be able to promote their own goods on the EU market through trading platforms,” the central bank said in a press release on Monday.
The regulator assumes that this will not have a negative impact on international reserves, as the inflow of foreign currency to Ukraine for the goods sold will far exceed the additional demand for currency to pay VAT in the EU.
In addition, the NBU announced a number of other currency easing measures. In particular, the central bank allowed state-owned companies to buy and transfer foreign currency abroad to cover carbon dioxide emissions.
“State-owned enterprises will be able to buy foreign currency and transfer it to non-residents to purchase quotas to cover or compensate for carbon dioxide (CO₂) emissions associated with aviation activities,” the National Bank explains.
According to the regulator, this step contributes to the continuity of defense procurement under state contracts, will allow for further air transportation abroad, and will support military-technical cooperation with the EU.
Other transactions that the NBU has authorized since September 10 include payments for operations under reinsurance agreements concluded with foreign nuclear insurance pools.
“In particular, to pay a break-even bonus, which is a mandatory condition stipulated by the reinsurance agreement. This mitigation will have a minor impact on international reserves and at the same time will allow the Nuclear Insurance Pool to fulfill its obligations to partners, which is important for the smooth operation of the industry,” the NBU said in a release.
As reported, the regulator also allowed Ukrainian businesses to reimburse coupon payments on Eurobonds paid from February 24, 2022, to July 9, 2024, at the expense of their own foreign currency accumulated in Ukraine.
At the same time, starting from September 10, the NBU introduced a limit of UAH 100 thousand per month for payments for watches, jewelry, precious stones and coins from currency cards of Ukrainian banks abroad and up to UAH 500 thousand per month for transactions with real estate agents.
All of the above innovations are introduced by Resolution No. 108 of September 6, 2024, which was officially promulgated on Monday, September 9.
The National Bank of Ukraine (NBU) this week again increased net sales of foreign currency on the interbank market to $646.30 million from $624.49 million a week earlier, according to the regulator’s data. According to them, the central bank refrained from buying foreign currency for the third week in a row, while sales jumped from $624.49m to $646.30m.
The official hryvnia exchange rate rose by 17 kopecks over the week. – UAH/$1 to 41.0592 UAH/$1, while on the cash market the hryvnia strengthened by about 11 kopecks when buying – to 41.30 UAH/$1 and by 10 kopecks when selling – to 41.40 UAH/$1
Since the beginning of 2024, the dollar at the official rate has appreciated by 8%, or by UAH 3.05, and since the transition of the National Bank on October 3, 2023 to the regime of managed flexibility – by 12.3%, or by UAH 4.49.
Thus, this month the hryvnia managed to fall by 0.1%, or by 5 kopecks, while in July the official hryvnia exchange rate fell by 1.4%, or by 55 kopecks – to 41.0063 UAH/$1. In June, its decline slowed to 3 kopecks after weakening by 90 kopecks in May.
As evidenced by the data that the NBU managed to publish for this period, from Monday to Thursday the negative balance between the volume of currency purchases and sales by the population gradually widened from $5.96 mln to $36.63 mln.
Ukraine’s international reserves in July, according to preliminary estimates of the National Bank, decreased by 1.8%, or $572.3 million – to $37 billion 231.9 million, while net international reserves (NIR) fell by $3 billion – to $23.30 billion. According to the quantitative performance criterion (QPC) in the updated program of expanded financing of the EFF, Ukraine’s NIR at the end of September this year should be at least $28.8 billion, and at the end of the year – at least $26.3 billion.
At the same time, according to the Ministry of Finance, Ukraine received about $8.4bn of external financing in August. In particular, $4.5bn from the EU under the Ukraine Facility, of which $1.6bn is a grant, as well as $3.9bn grant from the US through the World Bank’s PEACE in Ukraine project.
The National Bank of Ukraine (NBU) has notified ASK Dnister (Lviv) that the Committee for Supervision and Regulation of Non-Banking Financial Services Markets on August 23 revoked the company’s operating licenses and excluded it from the State Register of Financial Institutions.
This insurer reported in the information disclosure system of the NCSSM.
As reported, the NBU on July 12 granted permission to ASK Dnister to voluntarily withdraw from the market by executing the insurance portfolio on the basis of its application.
The decision on the exit of PJSC “ASK ‘Dnister’ from the market and approval of the exit plan was adopted by the shareholders’ meeting on June 28, 2024.
The insurance portfolio of the company is formed of payments on insurance of land transport, except railway transport (91,6%), insurance of property against fire and other risks (6%), other types (2,4%).
The share of the company on insurance premiums in the insurance market makes 0,01%.
PrJSC ASK Dnister was founded in 1993, specializing in risk types of insurance.
In January-June this year, Ukrainian banks increased their net profit by UAH 11.4 billion, or 16.8% compared to the same period in 2023, to UAH 79.04 billion, the National Bank of Ukraine (NBU) reported.
“The main factors of profitability are the maintenance of a high net interest margin and almost zero allocations to provisions for losses from active operations,” the NBU explained the reasons for the increase in profitability.
“In the first half of the year, only seven small banks out of 62 solvent banks were unprofitable with a total loss of UAH 171 million,” the NBU said.
According to the NBU, the profitability of banks’ core assets continued to decline in the second quarter. In particular, it fell most rapidly for NBU certificates of deposit, which led banks to reduce their investments in these securities, the regulator said.
At the same time, interest rates on domestic government bonds (OVDPs) also went down, but the volume of investments in them grew.
“It is due to the increase in assets that banks have maintained a fairly high net interest margin and increased revenues,” the regulator emphasized.
It is noted that the return on equity of banks in the first half of 2024 amounted to 48.4%, which is lower than the same indicator in the first half of 2023, which was 56%.
The amount of income tax accrued by banks in the first six months of this year amounted to UAH 21.9 billion, compared to UAH 12.4 billion in the same period last year, as the income tax rate was increased from 18% to 25%.
According to the NBU, the banking system’s net profit last year amounted to UAH 82.8 billion after charging UAH 76.2 billion in income tax at the increased rate of 50%.
