Non-banking financial market shows growth, most segments post profit in 2020 - NBU
The market of non-bank financial institutions, despite the coronavirus crisis, increased the volume of transactions in 2020, according to the April review of the non-banking financial sector posted on the website of the National Bank of Ukraine (NBU).
At the same time, it is emphasized that almost all segments recorded significant, and some posted record indicators of profitability, except for credit unions that suffered losses due to the formation of reserves for credit losses.
According to the NBU, the further harmonious development of the sector will ensure the adoption of new laws to regulate the non-banking financial market expected in 2021. In particular, the issue of a transparent ownership structure, solvency, proper risk management, and consumer protection will be settled.
According to the regulator, insurance companies of Ukraine in the fourth quarter resumed the growth of assets after reducing in the second and third. Gross insurance premiums also rose during the quarter. The payout rate is 35% for risk insurance and 13% for life insurance, and has remained almost unchanged throughout the year.
It is noted that credit unions turned out to be vulnerable to crisis phenomena. The decline in the solvency of borrowers and the legal prohibition on the accrual of fines for late loan servicing led to deterioration in the quality of the loan portfolio. The share of loans overdue by more than 90 days doubled over the year, and provisions for loan losses increased significantly at the end of the year.
Segment assets declined 11% in the fourth quarter. Significant losses from the formation of reserves, low efficiency of operating activities, high cost of deposits and a decrease in the interest rate on loans caused a noticeable reduction in equity capital. As a result, nine institutions fail to meet the minimum regulatory solvency requirements. In the structure of credit unions' liabilities, the share of additional share contributions is gradually decreasing, being redistributed in favor of deposits with income more predictable for credit union members. The loan portfolio of credit unions is growing slowly, it is increasingly difficult for them to compete with other lenders.