Ukrainian banking system non-performing assets management: challenges and solutions

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

Shevchenko Olesia
Bachelor's student, Faculty of Finance and Banking, EPP "International Banking Business", Odesa National Economic University, Odesa, Ukraine, E-mail: olesia2sh04@gmail.com, ORCID: https://orcid.org/0009-0005-0104-2338

Received: 12.06.2025    Аpproved: 23.06.2025    Рublished online: 25.07.2025

Cite this article:

Nianchuk N., Shevchenko O. (2025) Ukrainian banking system non-performing assets management: challenges and solutions. Ed.: V.V. Kovalenko (ed.-in-ch.) and others [Upravlinnja problemnymy aktyvamy v bankivs''kij systemi Ukrainy: vyklyky ta shljahy vyrishennja.: V.V. Kovalenko (gol. red.)], Scientific Bulletin of the Odesa National Economic University (ISSN 2313-4569), Odesa National Economics University, Odesa, No. 6 (331), pp. 45-51.

Abstract

This article investigates the contemporary landscape of non-performing assets (NPAs) within the Ukrainian banking system, with a focus on their dynamic between 2020 and 2024. The primary objective is to meticulously analyze the efficacy of various non-performing loan (NPL) management strategies and their overarching impact on the financial stability and resilience of Ukrainian banks amidst the challenging conditions of martial law. The research employs a rigorous methodology, integrating analytical and synthetic approaches, graphical representation, and systematic analysis to derive robust conclusions. Key findings reveal a discernible positive trend in the reduction of the NPL ratio, which decreased from 41% in 2020 to 30.29% in 2024, signaling a commendable degree of progress in stabilizing the financial sector. However, despite this improvement, the NPL level remains notably elevated, particularly within the corporate loan portfolio, necessitating continued and intensified efforts in asset management. The study critically examines the structural shifts within the credit portfolio, noting the fluctuating dynamics across different borrower categories, including corporate, individual, and interbank lending. The article strongly substantiates the imperative for integrating international best practices, drawing lessons from successful models in European Union countries such as Italy and Greece, which have effectively utilized securitization mechanisms and established specialized asset management companies. Furthermore, the practical necessity of digital transformation in the banking sector is underscored, advocating for the adoption of advanced automated systems and artificial intelligence-driven tools for comprehensive credit risk monitoring and portfolio analysis. It emphasizes the development of tailored debt restructuring programs designed to meet the specific needs of diverse borrower segments, including small and medium-sized enterprises (SMEs) and individual clients. Implementing these recommendations—encompassing international experience, digital innovation, regulatory enhancements, and adaptive restructuring programs—is posited as crucial for mitigating credit risks, bolstering financial stability, and fostering the sustainable development of Ukraine's financial system and broader economy.

Keywords

non-performing assets, non-performing loans, banking system, credit risk, financial stability, debt restructuring.

JEL classification: G210;DOI: https://doi.org/10.32680/2409-9260-2025-6-331-45-51

UD classification: 336.71:336.764.1(477)

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