Increasing the tax on bank profits to 50% reduces the possibility of increasing the loan portfolio by 20% – Rozhkova

The repeated retrospective increase in the bank profit tax from 25% to 50% reduces the capitalization of the banking system, which, in turn, reduces the system’s ability to increase the loan portfolio by 20%, noted the First Deputy Head of the National Bank of Ukraine, Kateryna Rozhkova.

“In general, the system's potential is significant: at the moment, banks can increase their loan portfolio at least twice without violating capital requirements. However, for individual banks, this potential has significantly decreased,” she said in an interview with the Interfax-Ukraine agency.

Rozhkova recalled that the NBU’s concerns are primarily related to the fact that the war is not over yet, and further losses of assets by banks, deterioration in the quality of individual borrowers, and so on are possible, which will require additional capital investments.

“We call on banks to increase lending and offer interest rates acceptable to borrowers, which requires sufficient capital reserves. We hope that there will be no more such unforeseen steps,” the banker concluded.

Commenting on the likelihood of arbitrage due to differences in profit tax rates: 50% for banks, 25% for financial companies and 18% for the rest of the economy, Rozhkova noted that the banking sector is one of the most transparent, has undergone corporate governance and reporting reform, so the vast majority of banks do not abuse such things.

“At the same time, taxation of such markets should be equal. That is why the same tax rate for banks and financial companies is justified,” she emphasized.

As reported, according to preliminary data, Ukrainian banks received UAH 103.69 billion in net profit last year, which is 24.6% higher than the 2023 figures.

Banks paid UAH 83.72 billion in profit tax compared to UAH 76.64 billion in 2023, but the final amount of taxes paid will only be known after the completion of the annual audit of bank statements.

In 2024, after two years of decline, banks' loan portfolios increased by 10.8%. In particular, hryvnia loans to the corporate sector increased by 9.8%, or UAH 50.6 billion, and to the population – by 24.5%, or UAH 51.7 billion.

At the same time, foreign currency loans in dollar equivalent decreased: for the corporate sector – by 5.2%, or by 332 million US dollars, for the population – by 15.5%, or by 49 million US dollars.