Ukrainian Banks Continue to Face Credit Growth Challenges - Fitch

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The banking sector in Ukraine continues to face challenges in the area of credit growth stemming from unresolved problem loans and issues with solvency, Fitch Ratings agency said in a release on Thursday.

WASHINGTON (Sputnik) — In November, Fitch upgraded the long-term outlook on seven Ukrainian banks, including the State Export-Import Bank of Ukraine (Ukreximbank) and State Savings Bank of Ukraine (Oschadbank), from "CCC" to "B-."

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"We expect sector performance to remain under pressure from high provisioning needs, while solvency recovery is likely to be a long process, as permitted by the regulator, with some larger banks likely still requiring further support," the release stated.

The rating agency noted that sovereign debt exposure of the Ukrainian banking sector has recently grown, but was primarily held by state-owned banks.

"Banks' funding profiles have stabilised following external debt restructuring in 2015 and deposit funding is recovering gradually, driven by lower volatility of the hryvnia," the release noted.

Ukraine relies heavily on foreign assistance to support its economy and repay its debts amid the ongoing conflict between the central government and pro-independence forces in the country's southeast.

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