Ukrainian Banking Sector: Growth Despite Tax Pressure and Wartime Economy

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Time for Action analyzed data from the National Bank of Ukraine and banking reports to understand how the sector performed over the first seven months of 2025 and what will shape its trajectory through the end of the year. Despite martial law, heightened risks and an increased profit tax rate, the banking system demonstrates stability, growth and strong adaptability. All key indicators assets, lending, profitability show that 2025 will not be a downturn. On the contrary, the sector is moving toward results comparable to 2024: net profit is expected to reach 90–100 billion UAH.

As of August 1, 2025, the assets of solvent banks exceeded 3.52 trillion UAH, marking a historic record for the Ukrainian banking system. Growth of 3.2% since the beginning of the year reflects stable demand for banking services and expanding lending. Banks’ capital increased by 13.5%, reaching 424 billion UAH a significant rise that signals stronger financial resilience amid elevated risks.

Lending continues to be a major driver of this dynamic. The banking loan portfolio grew by 11.4%, reaching 1.27 trillion UAH. Notably, “the amount of loans issued not only caught up with the pre-war level, but exceeded by 19% the loan portfolio formed at the beginning of 2022.” This is a clear sign of revived economic activity among businesses and households. The share of non-performing loans (NPLs) continues to decline, and banks report progress in restructuring problem debts. As of August 1, the NPL ratio stood at 26.1%, while the share of corporate borrowers in default remained below 3%.

Customer funds amount to 2.8 trillion UAH, and although deposit growth is slower in 2025 than last year, no outflow of funds has been recorded. The NBU notes particularly fast expansion of household term deposits in hryvnia: “in Q2 2025, term deposits increased by 11.2% year-on-year, and quarterly growth rates were the highest since early 2024.” The increase in the NBU’s key policy rate automatically pushed up interest rates on deposits: average rates on new hryvnia deposits reached 10.5% for households and 10% for businesses.

Banks remain profitable despite heavy tax pressure. Net profit for January–July amounted to 92.5 billion UAH, only 1.2% less than a year earlier even though the profit tax rate for banks rose to 50% in 2025 (from the previous 25%). The National Bank explains this resilience by noting that banks maintain “high net interest margin and operational efficiency.” Although nine banks posted losses, the overall picture remains positive. PrivatBank continues to lead the market with 40.1 billion UAH in profit for the first seven months.

Business lending is recovering more rapidly than other segments. Hryvnia business loans in Q2 grew by more than 29%year-on-year, with over 60% directed to small and medium-sized enterprises. PUMB CEO Serhiy Chernenko explains this demand: “Today, the most popular financing among SMEs is working capital… companies need solutions for rapid response.” He adds that firms are actively investing in digital tools, internal processes and risk-management systems. At the same time, long-term investment loans remain essential chosen by companies planning strategic development over the next 3–5 years.

The role of the state program “5-7-9%” continues to diminish: its share dropped to 29.5%, down by 3.5 percentage points since the beginning of the year. This signals a gradual return of banks to fully market lending conditions. As noted by Vitaliy Kucher, a board member of Crédit Agricole Ukraine: “We always try to lend on market terms… so that companies are not dependent on this program.”

The sector remains highly concentrated: among the top ten banks by assets, five are state-owned, and their combined market share is 54%. This structure makes state-owned banks system-defining institutions. Meanwhile, the government and the NBU have revived discussions on partial privatization of state banks a topic that may see real movement in 2026.

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Time for Action emphasizes that the banking system in 2025 demonstrates the ability to operate stably even in wartime economic conditions. Assets and lending continue to grow, profitability remains high, and asset quality is improving. This confirms that banks not only withstand the pressure but also fulfill their core function providing stability and resources to the economy. Together with strong margins, risk-management adaptability and recovering demand for financial services, this forms the basis for a predictable scenario: by the end of 2025, banking assets are expected to grow by 3–5%, and net profit will remain within 90–100 billion UAH.

In a broader context, this means that Ukrainian banks have become one of the strongest pillars of the wartime economy. Their ability to generate profit, expand lending and maintain asset quality at a controlled level highlights that the sector has real potential for further development, despite challenges and fiscal pressure.