In Q1 2025, non-life insurance premiums increased, while life insurance premiums decreased. New lending by credit unions and finance companies declined in volume, whereas factoring volumes and pawnshops’ assets rose. This is according to the latest Non-bank Financial Sector Review.
Total assets of non-bank financial services providers in Q1 2025 grew by 0.2% qoq and by 4.6% yoy. The share of NBU-supervised non-bank financial institutions (NBFIs) in the financial sector’s total assets expanded to 10.3%.
Insurers
Non-life insurers’ assets in Q1 increased by 8% qoq and by 16% yoy, while life insurers’ assets grew by 3% qoq and 12% yoy.
Insurance premiums of non-life insurers rose, while life insurance premiums dropped, which was typical for the start of the year.
In Q1, the net profit of non-life insurers amounted to UAH 0.95 billion, and their return on equity increased slightly, to 5.2%. Life insurers’ profit remained unchanged year-on-year, at UAH 0.25 billion.
As of the end of Q1, three insurers violated the solvency capital ratio (SCR) or the minimum capital ratio (MCR), but the violators’ share in assets was as small as 1%.
Credit Unions
In Q1, the volume of assets and the number of credit unions continued to decline slowly, primarily those funded by additional share contributions.
Volumes of new loans decreased. This led to a decline in the loan portfolio, but its quality improved.
Credit unions continued to make an operating loss, so the segment ended the reporting quarter with a net loss.
At the start of April, six unions were in breach of the regulatory capital adequacy ratio, three unions licensed to take deposits failed to comply with the regulatory capital adequacy ratio requirement (N2), and another four such unions did not have a proper liquidity cushion. The violating institutions must submit and implement recovery plans.
Finance Companies and Pawnshops
The assets of finance companies in Q1 decreased by 1.2% qoq, but increased by 2.3% yoy. Lending and financial leasing declined in volume, while factoring grew.
In Q1, 80% of the institutions recorded a profit. As before, almost half of the segment’s profit was earned by UKRFINZHYTLO PrJSC, the operator of the eOselia program (due to interest on the domestic government debt securities in its capital).
The number of companies violating prudential requirements decreased from 32 to 7 over the quarter. The sources of capital increases by those financial institutions that have built up their own funds to meet regulatory requirements are being inspected. NBFIs that fail to eliminate violations leave the market.
Pawnshops’ assets in Q1 increased by 5.7% qoq and by 19.6% yoy. Revenues from providing financial services grew, making the segment profitable.
Prospects and Risks
The approaches to drawing up and submitting reports by non-bank financial services market participants continue to evolve. Credit unions have been submitting all their reports on a monthly basis since the start of the year. Finance companies have been submitting data on regulatory balance sheets and off-balance sheet liabilities on a monthly basis since 1 April, and will submit all other reports once a month from 1 July.
The Non-bank Financial Sector Review is a report that was first published by the NBU in October 2020. It focuses on the activities of NBU-regulated non-bank financial institutions, such as insurers, credit unions, finance companies, and pawnshops. The review highlights key developments in the non-bank financial market and provides comprehensive insights into its performance.
Along with submitting Q1 2025 reports, NBFIs could update their reporting data for Q4 2024. Retroactive adjustments were therefore made to some of the indicators.