Despite the reduction in the number of financial companies and pawnshops in July-September 2023, the segment’s assets, on the contrary, increased by 5.8%, according to the “Review of the Non-Banking Financial Sector. November 2023”.
According to the report, the volume of financial services provided increased in all major types, with the exception of factoring, which remained unchanged.
The regulator notes that the issuance of new loans to households in January-September this year decreased by 40% compared to the same period in 2021.
At the same time, the volume of financial leasing, which is mainly provided by legal entities – lessors, has been growing for the fifth consecutive quarter. New leasing agreements were concluded for the purchase of cars, agricultural machinery, and trucks. The sources of leasing financing are lessors’ equity and advance payments. The gradual recovery of basic financial services resulted in UAH 7.4 billion of profit in January-September 2023, of which more than half was generated by the state-owned institution Ukrfinzhytlo, the operator of the eHouse program, whose main income comes from interest payments on government bonds in the capital. Profitability was demonstrated by 72% of financial companies.
The NBU also notes that pawnshops continued to recover in the third quarter. The volume of assets and new loans increased slightly. Pawnshops’ revenues grew slowly, which made it possible to generate profits and improve profitability. Equity has increased by 9% since the beginning of the year due to profits from operations.
According to the regulator, the number of non-banking financial services providers decreased once again in the third quarter. The registry excluded 33 financial companies, eight credit unions, six pawnshops and four insurers. Most of the financial institutions left the market by voluntarily giving up their licenses.
In addition, two financial companies were removed from the register in accordance with the requirements of the Law on Payment Services and entered into the Register of Payment Infrastructure as payment institutions.
In the third quarter, the assets of non-bank financial services increased by 5.2% quarter-on-quarter and by 11.9% year-on-year. Assets grew in all market segments, but most rapidly in financial companies.
The share of non-bank financial institutions in the financial sector assets supervised by the NBU increased by 0.2 pp to 11.1% over the quarter.
The assets of pawnshops in the second quarter of 2023 increased by 6.2%, or by UAH 264 million – to UAH 4.54 billion, the National Bank of Ukraine said in a review of the non-banking financial sector.
According to its data, in general for the first half of the year they increased by 10.7%, or UAH 439 million, completely overlapping the reduction of UAH 188 million last year.
At the same time, it is indicated that the number of pawnshops continues to decline: after leaving the market last year 78 companies, in the first quarter of this year followed by 12, and in the second quarter – another 7 pawnshops. As a result, the number of market participants at the middle of this year was 164 – almost half the number at the end of 2019 (324).
The National Bank specified that among all sectors of the financial market, pawnshops were the fastest-growing both in the second quarter of this year and over the half-year, surpassing even banks, whose assets grew by 5.6% and 8.8%, respectively.
According to the NBU, the loan portfolio of pawnshops added UAH 245 million and UAH 298 million in the first and second quarters, respectively, reaching UAH 3.672 billion at the end of the period.
This allowed to increase interest income in the first quarter to UAH 656 million, in the second – to UAH 780 million, which is respectively by 2.9% and 96.8% more than in the same period last year.
At the same time, although revenues for salaries rose from UAH 100 million in the fourth quarter of last year to UAH 121 million in the second quarter of this year, they are still much lower than the approximately UAH 200 million before the war.
Rent expenses have also increased: from UAH 93 mln in the fourth quarter of last year to UAH 111 mln in the second quarter of this year, although before the war they amounted to about UAH 170 mln.
According to the results of the first quarter of this year, the net profit of pawnshops amounted to 14.21 million UAH, at the end of the second quarter it increased to 52.26 million UAH, while the same periods last year pawnshops ended with a net loss of 56.86 million UAH and 123.89 million UAH, respectively.
The volume of cash assets of pawnshops after a decrease in the first quarter from UAH 388 mln to UAH 340 mln in the second quarter increased only by UAH 3 mln, while the volume of fixed assets decreased during the half-year from UAH 463 mln to UAH 381 mln, probably due to the reduction in the number of companies in the market.
The growth of loans was largely due to an increase in accounts payable: from UAH 2.512 billion at the beginning of the year to UAH 2.659 billion at the end of the first quarter and UAH 2.902 billion at the middle of the year, while shareholders’ equity grew by only UAH 83 million to UAH 1.44 billion during this time.
The National Bank added that after the coverage ratio fell to 108% in the first quarter, it recovered to 111% in the second quarter. As for the structure of collateral, the share of precious metal products rose from 72% to 73% over the six months, while the share of household appliances fell from 28% to 26%.
