On December 28, 2018, the National Bank of Ukraine published the results of diagnostics and stress-testing of banks of Ukraine. The published data is available on the NBU website in the section.
The resilience assessment includes an asset quality review (AQR), and for the largest banks also stress-testing. The objects of stress-testing were banks that accounted for in aggregate more than 94% of the assets of the banking sector. For stress-testing, banks that were the largest by the average value of two indicators were chosen: risk-weighted assets and deposits of individuals.
The published data reflects the indicators of the adequacy of the core and regulatory capital of banks based on the results of AQR and stress-testing. The need for capital that arises in the first year under the base scenario of stress-testing must be covered through the fulfillment of the capitalization plan by the end of March 2019. The need that arises under the adverse scenario in the forecast period must be covered through the fulfillment of restructuring plans by the end of 2019.
Additionally, in the data tables, the residual need for capital is indicated, that is, the need that remains after taking into account the effects of measures that were carried out by banks during 2018. The effect of individual measures that were carried out at the end of the year but have not been assessed and verified by the NBU will be reflected by banks in subsequent periods.
The results of the resilience assessment testify that the banking sector is sufficiently capitalized, but should increase the safety margin to strengthen resilience to possible crises.
Results based on the asset quality review
Based on the results of AQR and extrapolation (56 banks that did not pass stress-tests), in four of the 56 banks a need for capital was identified as of the reporting date – the beginning of 2018. Two of them by the moment of the completion of diagnostics were already sufficiently capitalized. Two more banks needed recapitalization, however by the end of 2018 they had already carried out the necessary measures.
The results based on the asset quality review of fifty-six banks, including JSC «CIB», have been published on the NBU website at the link.
Results for banks that underwent asset stress-testing
Out of the 24 banks that passed stress-testing, 13 institutions had a need for capital in the total amount of UAH 42.1 billion. The need amounted to UAH 34.7 billion. Taking into account the measures carried out by banks and verified by the National Bank, by the end of 2018 the need decreased to UAH 19.7 billion.
Of the 13 banks, four banks fully closed the need for capital under the adverse scenario. Three more banks fulfilled the restructuring plans by more than half. The other banks have time until the end of 2019 for the full fulfillment of restructuring plans.
The National Bank plans to further carry out the assessment of the resilience of banks and the banking sector and publish its results broken down by financial institutions. The list of banks, as well as updated approaches to stress-testing in 2019, will be published by the National Bank in January.
Information based on the results of the resilience assessment of JSC «CIB» has been published on the Bank's website.
