Bank loans for individuals gradually resume

Experts concluded that Ukrainians take up more new loans than they return their previous ones. The size of the loan portfolio for individuals in hryvnias has been growing for two months in a row, and reached 60.522 billion hryvnias in August.

Mainly retail and automobile loans have been resumed in the country. However, there are also some signs of mortgage lending. Out of the 50 biggest banks, the number of those providing loans for automobiles increased in August 19 through 21. At present, 15 banks deal cover the secondary-residence market, and 10 banks deal with the primary one.

Mykola Ivchenko, the head of the information-analytical center Forex Club in Ukraine, believes that this is a positive sign for the market; on the one hand, it demonstrates financial institutions’ growing trust in the population and the willingness of commercial banks to resume their activities on this segment. On the other hand, it shows the people’s growing need to take loans, and their confidence in their ability to repay them, especially given that income increased by 9.3 percent during the first seven months of 2010.

However, Ivchenko says, despite some revitalization in this sector, the size of this year’s loan portfolio for individuals in hryvnias will decrease anyway. Crediting will only really resume in 2011.

In August the loan portfolio for individuals in foreign currencies fell by 1.18 percent, to 19.437 billion dollars (153.287 billion hryvnias). The ban on giving loans in foreign currencies to individuals is the main reason for the fall, the Forex Club believes. The share of loans in foreign currencies for individuals gradually fell, and in early September constituted 71.7 percent of total loans for individuals, whereas in early January its share was 72.2 percent.

Together with the increase in crediting, banks continue encouraging people to open deposit accounts, though annual interest rates are not as appealing as before. However, according to the banks, deposit accounts are now the most attractive way of investing. “In my opinion, bank deposit accounts are the best way to store surplus funds. At this, there are relatively high interest rates in the medium-term perspective, in view of the national currency’s stability,” supposes Vladyslav Kravets, a board member of the Prominvestbank.