The economic shock of the pandemic did not create significant difficulties for the country’s lenders during 2021. This was somewhat surprising, as previous economic crises have generally driven a surge in non-performing loans and even led to bank runs and collapses in some cases.
The appetite of local consumers for borrowing has been negatively affected by a tightening of monetary policy during 2021. At the beginning of 2021, the National Bank of Ukraine’s benchmark rate stood at a seven-year low of 6%, but by September it had reached 8.
With smartphones increasingly ubiquitous in Ukraine, particularly among young adults, mobile-first remains a key trend in consumer credit. COVID-19 restrictions have only served to fuel growth in loan applications using smartphone apps, as a fear of contagion made many local consumers reluctant to visit bank branches in person – even after lockdown measures were relaxed.
The rate of growth in both the outstanding balance of consumer credit and its gross balance will remain relatively modest in constant value terms during the forecast period as a whole. In what remains an uncertain economic environment, many lenders will remain cautious – particularly during the early part of the forecast period.
Home lending and particularly mortgages/housing will be the top performers in consumer lending during the forecast period. The rate of growth in property prices surged in Ukraine during 2019 and remained relatively robust in spite of the economic shock of the pandemic, due in large part to a sharp decline in interest rates.
Partnerships with retailers, car dealerships and real estate companies will become more commonplace in consumer lending, as lenders struggle to defend their value share in an increasingly competitive environment. Moreover, mobile banking will increasingly become the norm, enabling banks to accelerate the approval process.
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Non-mortgage consumer debt extended to individuals for personal or household use including installment loans and credit cards. Examples of consumer credit include auto lending, card lending, durables lending, education lending, home lending and other personal loans. Consumer credit includes both revolving and non-revolving credit.See All of Our Definitions
This report originates from Passport, our Consumer Credit research and analysis database.
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