By KYIV. Dec 28 (Interfax-Ukraine) – The sensitivity of the Ukrainian financial system to new attacks has decreased significantly since the beginning of November, the National Bank of Ukraine (NBU) said in its Financial Stability Report, which is released every six months.
"Almost all sub-indices of the Financial Stress Index (FSI) have been falling since the beginning of November. This reduced the index to the lowest values since the beginning of the full-scale war," the NBU said.
According to the graph it provided, the FSI, which ranges from 0 to 1, where 0 is the absence of any pressures, and 1 is the highest level of distress, during the war peaked at 0.8 in early March, fell below 0.2 by the end of May , but then approached 0.5 again in August. At that time, this was due to the high values of government securities sub-indices on the eve of the restructuring of eurobonds and the banking sector due to rising interest rates.
"The last surge in FIS values occurred as a result of attacks on the energy infrastructure in October. During this period, the values of the sub-indices of government securities and the banking sector remained high, and the currency sub-index additionally reacted to the attacks, because fluctuations in the cash exchange rate intensified and foreign exchange interventions of the NBU temporarily increased," the regulator said.
According to its estimates, then the FSI reached about 0.48, while now its level has dropped below 0.18.
As for the risk map of the financial sector, which is measured by seven parameters ranging from 0 to 10 each, the total assessment has decreased by 13% since June – from 46 to 40, the NBU said.
Household credit risk declined (-1) due to low leverage, liquidity risk (-1), yield risk (-2) due to higher core incomes and improved operational efficiency of banks, and foreign exchange risk (-2) before mainly due to the decrease in the volatility of the cash exchange rate and the restoration of the volume of international reserves.
Macroeconomic risk and corporate credit risk (8) are still the highest with a score of 8, as the situation in the real sector is difficult, business expectations are pessimistic, and the share of defaults is growing.
The National Bank estimates capital risk at 6: most banks have retained a significant margin of safety and replenished their capital with current profits, while the risks of further credit losses remain.
Foreign exchange risk, household credit risk and profitability risk have an average score of 5, while liquidity risk has the lowest score of 3, as bank funding is stable: the stock of highly liquid assets has increased, but some banks are experiencing liquidity problems.
