Development of the banking sector of Ukraine: challenges and adaptation in the conditions of economic instability and martial laworcid ID

Nianchuk Natalia
PhD in Economics, Associate Professor of the Department of Banking, Odesa National University of Economics, Odesa, Ukraine, E-mail:natalya.nyanchuk@gmail.com, ORCID: https://orcid.org/0000-0001-7686-4727

Savelieva Svitlana
Bachelor's student, Faculty of Finance and Banking, EPP "International Banking Business", Odessa National Economic University, Odessa, Ukraine, E-mail:svitlanasavelieva04@gmail.com, ORCID: https://orcid.org/0009-0004-3466-3897

Received: 14.05.2025    Аpproved: 23.05.2025    Рublished online: 05.07.2025

Cite this article:

Nianchuk N., Savelieva S. (2025) Development of the banking sector of Ukraine: challenges and adaptation in the conditions of economic instability and martial laworcid ID. Ed.: V.V. Kovalenko (ed.-in-ch.) and others [Rozvytok bankivs kogo sektoru Ukrainy: vyklyky ta adaptacija v umovah ekonomichnoi nestabilnosti ta vojennogo stanu; za red.: V.V. Kovalenko (gol. red.)], Scientific Bulletin of the Odesa National Economic University (ISSN 2313-4569), Odesa National Economics University, Odesa, No. 5 (330), pp.50-57.

Abstract

This article comprehensively investigates the state and dynamic development of the banking system of Ukraine amidst prolonged economic instability. The primary objective is to meticulously analyze the shifts in key financial indicators of Ukrainian banks during the challenging period of 2021–2024. Furthermore, the study aims to critically assess the profound impact of martial law, initiated in 2022, and the National Bank of Ukraine's (NBU) monetary policy on the overall stability and resilience of the banking system. The research methodology employs a robust combination of analytical, graphical, and statistical approaches to provide a multifaceted perspective on the observed trends. Despite the unprecedented challenges posed by the full-scale invasion, including heightened inflation, currency volatility, and a significant contraction in economic activity, the findings reveal a remarkable and gradual stabilization of the banking system. Several crucial factors have been identified as instrumental in mitigating systemic risks and fostering this stabilization. These include the strategic strengthening of state presence within the banking sector, a notable growth in banking income and asset volumes, a consistent increase in profitability metrics, and the successful stabilization of the deposit base. Concurrently, the effective and adaptive regulatory measures implemented by the NBU played a decisive role in guiding the sector through turbulent times. The article delves into specific financial trends, such as the dynamics of the NBU's key policy rate in response to inflation, the evolution of bank assets and liabilities, and the structure of loan and deposit portfolios. It highlights how targeted government programs, like "Affordable Loans 5-7-9%," contributed to supporting businesses and stimulating economic activity during the war. The analysis also touches upon the impact of legislative changes, such as the full guarantee of deposits during martial law, on restoring public trust and stabilizing the deposit market. Despite the observed positive trends, the study identifies ongoing areas requiring attention, including the need for continuous improvement in the quality of loan portfolios, refinement of risk management mechanisms, and further enhancement of bank capitalization. The prospects for future research are intrinsically linked to a deeper evaluation of the banking system's resilience against potential future crises and the effectiveness of post-crisis recovery and reconstruction measures.

Keywords

banking system, economic instability, assets, liabilities, loan portfolio, deposit portfolio, bank capital, income.

JEL classification: J210; D530;DOI: https://doi.org/10.32680/2409-9260-2025-5-330-50-57

UD classification:36.71:330.34"364"

References

1. Demianchuk O., Pavlenko B. Monetary policy and stability of the banking system in Ukraine. Scientific review. 2024. Т. 2, № 94. P. 29. Retrieved from https://doi.org/10.26886/2311-4517.2(94)2024.3. (accessed 15 March 2025). [Іn Ukrainian].
2. Gavrilko T., Domanska O. Ukraine's banking system under full-scale aggression. Nauka i tekhnika sohodni. 2024. № 9(37). Retrieved from https://doi.org/10.52058/2786-6025-2024-9(37)-146-159 (accessed 21 April 2025). [Іn Ukrainian].
3. Balicka М., Tkachenko А. The experience of the National Bank of Ukraine in ensuring the stability of the banking system in the face of modern challenges. Ekonomika ta suspilstvo. 2025. № 72. Retrieved from https://doi.org/10.32782/2524-0072/2025-72-132 (accessed 04 May 2025). [Іn Ukrainian].
4. Danilenko U. Post-war challenges and opportunities for the development of the banking system in Ukraine. Ekonomika ta suspilstvo. 2025. № 72. Retrieved from https://doi.org/10.32782/2524-0072/2025-72-14 (accessed 14 April 2025). [Іn Ukrainian].
5. Rushchyshyn N. M. and others. The current state of the banking system of Ukraine and the prospects for its development. Visnyk Lvivskoho torhivelno-ekonomichnoho universytetu. 2024. № 75. С. 27–36. Retrieved from https://doi.org/10.32782/2522-1205-2024-75-04 (accessed 10 May 2025). [Іn Ukrainian].
6. Stoyka V.S. Theoretical approaches to determining the essence of the banking system and its role in the country's economy. Naukovyi visnyk uzhhorodskoho natsionalnoho universytetu. ekonomika. 2010. Вип. 30. P. 202–209. Retrieved from https://surl.li/khtcxg (accessed 24 March 2025). [Іn Ukrainian].
7. National Bank of Ukraine. Inflation Report, April 2025. Kyiv: NBU, 2025. Retrieved from https://bank.gov.ua/ua/monetary/report (accessed 17 April 2025). [Іn Ukrainian].
8. Ministry of Finance of Ukraine. Ministry of Finance: Last week, enterprises received 933 loans for UAH 2.4 billion under the state program “Affordable loans 5-7-9%”. Kyiv: Ministry of Finance, 2025. Retrieved from https://mof.gov.ua/uk/news/minfin_za_minulii_tizhden_pidpriiemtsi_otrimali_933_krediti_na_24_mlrd_grn_za_derzhprogramoiu_dostupni_krediti_5-7-9-5049 (accessed 24 April 2025). [Іn Ukrainian].
9. National Bank of Ukraine. Financial Stability Report, December 2024. Kyiv: NBU, 2024. Retrieved from https://bank.gov.ua/ua/news/all/zvit-pro-finansovu-stabilnist-gruden-2024-roku (accessed 18 April 2025). [Іn Ukrainian].
10. On Amendments to Certain Laws of Ukraine on Ensuring the Stability of the Deposit Guarantee System for Individuals: Law of Ukraine dated 01.04.2022 No. 2180-IX: as of October 28, 2022. Retrieved from https://zakon.rada.gov.ua/laws/show/2180-20#Text (accessed 27 April 2025). [Іn Ukrainian].