NBU Annual Report 2024: Resilience as Foundation for Economic Recovery

The NBU has released its Annual Report 2024, which summarizes the most important results and changes in Ukraine’s macrofinancial system during the third year since the full-scale invasion.

"Summarized in one sentence, our goal for 2024 was to reinforce the foundation for economic recovery and continue to bring the country’s economic life back to business as usual even as the war went on. Ultimately, this is the only way to set the stage for a bright future. During the reporting year, we consistently put these words into action by taking specific decisions and achieving concrete results. And most important, regardless of how difficult our tasks are, we maintain the NBU’s independence," said NBU Governor Andriy Pyshnyy.

The NBU remains committed to its mandate of ensuring price and financial stability, a key to achieving sustainable economic growth. The NBU’s efforts in 2024 were primarily aimed at maintaining macrofinancial stability, bolstering Ukrainians’ confidence in the national currency, safeguarding the smooth operation of the financial system and critical infrastructure, and pressing forward with the reform of the banking and non-bank sectors to align them with EU standards. All of these elements are laying the necessary groundwork for a sustainable recovery of Ukraine’s economy and for continued efforts to attract investment during post-war reconstruction.

Despite the war’s challenges, the macrofinancial situation remains under control

In 2024, the NBU switched to flexible inflation targeting, which involves bringing inflation to its 5% target within an acceptable policy horizon (of up to three years). In addition, the FX market fully adjusted to managed flexibility of the exchange rate, a regime that the NBU introduced in October 2023.

Macrofinancial stability and the sustainability of the FX market made it possible in May 2024 to pass the largest package of FX-easing measures for businesses since the full-scale invasion. This improved the conditions for doing business in Ukraine, but did not have a significant impact on the FX market.

The NBU’s interest rate policy decisions took into account the need to maintain a balance between ensuring price stability, which the NBU prioritizes, and supporting economic growth. Specifically, as inflationary pressure was low, the NBU continued an easing of its interest rate policy that began in mid-2023, cutting the key policy rate in H1 2024 by 2 pp, to 13%. Coupled with the implementation of the NBU’s core strategy, these decisions gave a strong impetus to the development of lending: the net hryvnia corporate loan portfolio in 2024 grew 21%, while the net hryvnia retail loan portfolio surged 40%.

At the same time, the NBU responded early on to the projected reversal of the inflation uptrend in H2 2024 by suspending the easing of its interest rate policy in July. In December, the NBU moved to raise the key policy rate due to intensified price pressures. This made it possible to keep inflationary processes and expectations in check.

The financial sector is sustainable, and its reform continues as per EU requirements

In 2024, the banks remained capitalized and profitable, operating smoothly and supporting the economy. Thanks to profitability and a favorable transition period, they successfully migrated to a new capital structure and capital adequacy ratios that meet EU standards. According to last year’s estimates, the equivalence of banking sector regulation in Ukraine to EU standards reached a fairly high level of more than 70%.

In confronting the full-scale war’s challenges, the banks displayed examples of solidarity and responsibility throughout 2024. The first such case was cooperation to develop a lending mechanism to finance the restoration of Ukraine’s energy infrastructure. From June through December 2024, the banks issued UAH 10.5 billion in financing for company projects to rebuild energy facilities. The generation capacity made possible by this funding exceeded 470 MW.

The second example was the banks’ proactive approach to ensuring the transparency of the payment services market’s operation, an effort that was enshrined in a relevant memorandum. The purpose of the document is to streamline existing processes and approaches in the field of effective monitoring of payment transactions in order to prevent the use of payment infrastructure to finance illegal activities, including terrorism, sabotage, and the shadow economy. Almost all of the banks signed up to the memorandum, as did non-bank payment institutions.

The non-bank financial sector also continued to undergo active transformation in 2024. This change was enabled by the entry into force in January 2024 of a number of new NBU-drafted laws and regulations on financial services, insurance, and credit unions. The new legislation tightened the regulation of the non-bank financial sector and guaranteed that it would function in a quality-oriented manner in order to create a transparent, reliable, and competitive market that respects EU rules and contributes to the country’s recovery.

The NBU plans to further implement European regulations in the banking and non-bank sectors.

There is sustained confidence in the banking system and the national currency

Evidence of this is the growth in hryvnia retail term deposits at the banks. In 2024, households’ hryvnia term deposits as a share of the total volume of hryvnia term deposits accounted for about one-third, up significantly from 2022.

The volume of all deposits held by households and businesses in bank accounts also increased. According to 1 January 2025 data, there was UAH 1.9 trillion in clients’ hryvnia deposits at the banks (UAH 0.8 trillion in retail accounts plus UAH 1.1 trillion in corporate ones). Over the year, hryvnia retail deposits in the banks rose in volume by 12%, and corporate ones by 19%. The volume of hryvnia deposits held by clients at the banks had doubled since the outset of the full-scale war.

The level of cooperation with international partners remains high

The international community continued to support Ukraine. In 2024, external financing reached USD 42 billion, bringing Ukraine’s international reserves to a new historical high of USD 43.8 billion, according to data available on 1 January 2025.

Effective interactions with the International Monetary Fund continued, strengthening the economy’s and the financial sector’s resilience. In 2024, Ukraine successfully passed four reviews of the Extended Fund Facility (EFF) and a total of six reviews since the program commenced (by the time the Report was released, Ukraine had successfully cleared seven EFF reviews and was gearing up for the eighth). This is an unprecedented outcome in Ukraine’s entire history of cooperation with the IMF.

Through the Ukrainian team’s hard work, including the NBU’s efforts, progress was made on the issue of making frozen russian assets accessible to Ukraine. The Extraordinary Revenue Acceleration (ERA) Loans initiative was implemented, giving Ukraine access to G-7 financing secured by proceeds from frozen russian assets.

A screening of national legislation jointly with the European Commission also made headway, leading to record progress in the implementation of international programs, including under the EU’s Ukraine Facility initiative.

The financial system continues to move forward with financial inclusion development

Throughout 2024, under the NBU’s leadership and with the World Bank’s support, active efforts continued to be put into taking financial inclusion to the next level and making the financial sector more barrier-free. The banks and non-bank financial institutions have been gradually implementing the NBU-approved Methodology Guidelines on Rules for Inclusive Provision of Financial Services.

The financial system has focused on efforts to fully reintegrate veterans and frontline regions into the country’s economic life, in particular within the framework of the Charter on Financial Inclusion and Reintegration of Veterans, to which 38 large banks have signed up.

The introduction of a financial inclusion bank with a limited banking license should be an incentive for the further development of financial inclusion. This will help resolve the issue of access to financial services for households and businesses in small towns, de-occupied territories, and areas close to the frontline. The relevant draft law, drawn up by the NBU last year, is under consideration by the Verkhovna Rada.

In addition, the NBU in 2024 focused on a number of other important areas, including:

• moving forward with digital transformation. The NBU migrated to a new version of its System of Electronic Payments (SEP) that has the capacity to facilitate instant credit transfers and ensure an almost immediate remittance of funds from the payer’s account to the recipient’s.
• promoting the financial literacy of Ukrainians. With the NBU’s assistance, the National Strategy for Financial Literacy Development until 2030 was approved, the Framework of Financial Competencies for Children and Youth of Ukraine was published, and a textbook for 8th-grade students was prepared to teach them Entrepreneurship and Financial Literacy, a new subject that received the Ministry of Education and Science’s stamp of approval.
• restoring historical justice in monetary circulation. The NBU’s initiative to rename Ukrainian coins from the russian kopiika to shah, an inherently Ukrainian term, has garnered support from the scientific community and is actively being discussed.

For more details, see the NBU’s Annual Report 2024.