The National Bank of Ukraine released its Financial Stability Report, highlighting ongoing anxiety in the financial sector due to Russian strikes on energy infrastructure. Despite this, the Index of Financial Stress remains below pre-invasion levels.
One major impact is the rise in Ukraine’s Eurobond yields, decreasing the value of existing bonds while interest rates for in-country bonds have fallen, making them attractive for investment.
Banks are increasing their holdings of government bonds, along with business loan volumes, which rose by 12 percent year-over-year. Peer-to-peer lending is a driving force in the market, with easy access being a key competitive advantage.
The mortgage sector is primarily driven by state-supported programs, but the central bank warns of potential housing shortages in the future due to war-related uncertainties.
Despite economic aid agreements, ongoing challenges, including a shortage of skilled professionals and Russia’s aggressive actions, are impacting GDP growth. The central bank revised its forecast to 3 percent for 2024.