NPL in Ukraine is declining: the banking system shows signs of stabilization

By the end of 2025, the share of non-performing loans (NPL) in Ukraine’s banking sector may decrease to 25% or even lower — according to updated data from the National Bank of Ukraine (NBU) and analysis by lawyer Andrii Spektor, who specializes in banking and financial law.

As of July 1, 2025, the NPL level stood at 27%, the best figure since the start of the full-scale invasion. This is an important signal not only for financiers but also for the entire business community: the banking sector has adapted to the new reality and is ready to support the economy under prolonged challenges.

“In just six months, the volume of problem loans decreased by 3.3 percentage points, mainly due to the growth of new, high-quality lending. Banks’ portfolios increased by more than UAH 133 billion, or 10.3%,” notes Andrii Spektor.

The household segment shows particularly positive dynamics: the NPL share has fallen to 14%, reflecting improved payment discipline and the revival of consumer lending. The corporate sector demonstrates even better progress: the indicator decreased by 3.5 percentage points, to 35.5%.

Who shows the best results?

• Private Ukrainian banks: 9.9% NPL
• Foreign-owned banks: 9.5%
• State-owned banks: 38.5% (but with adjustment for “historic” debts)

The expert explains: a significant part of NPLs in state banks are “toxic” assets from past crisis periods. If excluded, the real level of problem debt in the state sector drops to 21.6%, and across the system as a whole — to 16.1%.

Legal instruments: not only write-offs

Andrii Spektor emphasizes that legal instruments play an important role in reducing the NPL share — restructuring, settlements, and the sale of claims.

“Writing off bad debts, while it affects statistics, does not create economic value. By contrast, selling distressed assets through SETAM, as PrivatBank plans to do (for about UAH 5 billion by the end of 2025), is a real mechanism for cleaning up balance sheets and raising resources,” the expert stresses.

What’s next?

In the baseline scenario, according to Andrii Spektor’s forecast, the NPL share may fall to 25% by year-end. However, the pace of decline will depend on war-related risks, the financial stability of certain industries, and overall demand for lending.

“The NPL indicator remains a key marker of the resilience of the banking system, and its dynamics will determine the sector’s ability to support the economy during recovery,” the lawyer concludes.