Problems of profit formation by banks with a state share under the state martial law

Kovalenko Victoria
D.Sc. (Economics), Professor, Professor, Department of Banking, Odessa National University of Economics, Odessa, E-mail:kovalenko-6868@ukr.net, ORCID ID: https://orcid.org/0000-0003-2783-186X

Serhieieva Olena
PhD (Economics), Associate Professor, Department of Banking Odessa National University of Economics, Odessa, E-mail:lenasergeeva2007@ukr.net, ORCID ID: https://orcid.org/0000-0002-5523-3894

Lysianskyi Stanislav
student of the first year of study, specialization "Finance, Banking and Insurance", Odessa National University of Economics, Odesa, E-mail:s.lisyansky@gmail.com, ORCID ID: https://orcid.org/0009-0004-1110-4419

Cite this article:

Kovalenko V., Serhieieva O., Lysianskyi S. (2023) Problems of profit formation by banks with a state share under the state martial law. Ed.: V.V. Kovalenko (ed.-in-ch.) and others [Problemy formuvannia prybutku bankamy z derzhavnoiu chastkoiu v umovakh voiennoho stanu; za red.: V.V. Kovalenko (gol. red.)], Scientific Bulletin of the Odessa National Economic University (ISSN 2313-4569), Odessa National Economics University, Odessa, No. 3-4 (304-305), pp. 63-69.

Abstract

Introduction. Under the current conditions, when the country has passed the COVID-19 pandemic and has been at a full-scale war for more than a year, negative dynamics are observed in all areas of the economy, including the financial sector. Therefore, banking institutions face the task of maintaining the branch network and client base, keeping the banking business afloat and obtaining profitability. The consequences of the martial law in Ukraine in 2022 led to imbalances, primarily of the main macroeconomic proportions in the country's economy. The rapid growth of inflation indicators, the significant outflow of funds of individuals, the increase in the level of dollarization, and the decrease in the purchasing power of the national unit affected the banks’ activity. The banking system in Ukraine faced a number of problems, namely the increase in the volume of problem loans and reserves for them, the lack of external investments, problems with borrowing resources in the domestic market, which increased competition in the banking market. Purpose. The analysis of scientific sources shows that there is no general opinion on the definition of the essence of profit, factors that affect the banks’ profitability. The identified problems increase the relevance of the research regarding the recommendations on increasing the bank’s profitability under the martial law. Results. It was determined that the profitability of banks with a state share in 2021 was maximum due to the large volumes of investments in bonds of domestic state loans. A significant interest margin from such operations became the main factor in the growth of profitability and efficiency of the three state-owned banks. In 2022, the National Bank of Ukraine changed its tactics for mass refinancing with respect to banks with a state share, which was immediately reflected in the profitability indicators of these banks.Conclusions. Summarizing the above, it can be concluded that in order to increase the profitability of banks with a state share, it is necessary to revise strategies as to adjusting the assessment of credit and interest risks, the risk of losses, liquidity, the structure of assets and liabilities, the quality and efficiency of employees and the organization of risk management, to form a line of new banking products with taking into account the economic changes of present times and digitalization.

Keywords

macroeconomic indicators, profit, loss, banks with a state share, financial result, efficiency.

JEL classification: G210, Е590, H810; DOI: 10.32680/2409-9260-2023-3-4-304-305-63-69

UD classification: 336.71(477):355.01

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