The share of state-owned banks in the total assets of the banking system in the first half of 2022 increased from 49.8% to 53.4%, including by 1.7 percentage points (pp) in the second quarter, reported in the review of the banking sector, published by the National Bank on Tuesday.
According to him, of the four state-owned banks, PrivatBank makes the main contribution, which increased its market share from 24.7% to 27% in the first half of the year, including by 1.2 percentage points in the second quarter.
As reported, after the banking crisis of 2014-2016, the nationalization of PrivatBank and the additional capitalization of state-owned banks, while many private banks were withdrawn from the market, the share of state-owned banks in the market increased significantly, but began to decline in subsequent years. In particular, in 2020-2021 it decreased from 60.4% to 49.8%, including PrivatBank – from 27.9% to 24.7%.
The increase in the share of banks during the war is mainly due to a decrease in the share of foreign groups, which fell from 30.1% to 27.2% in six months, while private banks – from 20.2% to 19.4%. At the same time, in the second quarter, private banks reduced their share faster – by 1.2 percentage points, while foreign banks – by 0.5 percentage points.
The same picture is observed in relation to net assets: the share of state-owned banks increased from 46.7% to 50% in the first half of the year, including PrivatBank – from 19.8% to 22.1%. The second quarter saw an increase of 2.2 percentage points, respectively. and 1.6 p.p.
The share of state-owned banks in attracting deposits is even greater: if in 2019-2021 it decreased from 63.5% to 55.5%, then in six months of this year it increased to 59.3%, including PrivatBank – from 31.2% % to 35.4%. The second quarter saw an increase of 3.4 p.p., respectively. and 2.6 p.p.
Over the past six months, the share of deposits in foreign banks has decreased from 25% to 22.9%, in private banks – from 19.5% to 17.8%, including in the second quarter by 1.6 percentage points, respectively. and 1.8 p.p.
In general, the NBU notes an increase in market concentration: the share of assets of the ten largest banks in total assets has increased from 73.8% to 77.6% since the beginning of the war
As a result, the Herfindahl-Hirschman Index (HHI), an indicator of concentration in the banking market, which at a value of up to 1000 indicates weak market concentration, rose during the war for total assets from 945 to 1116, returning to the level of the end of 2020, although at the end of 2019 year it was even higher – 1268.
And its value in terms of deposits – 1712 compared to 1395 before the war – has become significantly higher than at the end of 2019 (1597).
The NBU clarifies that the group of foreign banks at the middle of the year included 16 banks, while the group of private ones – 48.
