The total assets of non-bank financial service providers rose 5.7% in Q3. Assets grew in all market segments, except for credit unions. This is according to the Non-Bank Financial Sector Review.
The highest quarter-on-quarter growth occurred in finance companies, with assets up 6.4% qoq, the Review shows. Insurers’ assets increased 3.7% qoq. Pawnshops’ assets rose too. By contrast, credit unions’ assets decreased in volume for two straight quarters. The share of NBU-supervised NBFIs in all financial sector assets expanded to 10.1%.
Insurers
Life insurers’ assets held almost steady in Q3, while those of non-life insurers increased 6% qoq, although 14 companies had exited the market.
Non-life insurers’ premiums have grown for two straight quarters (up 12% qoq and 10% yoy). Life insurers’ premiums rose (10% qoq and 9% yoy) after a drop in Q2.
Premiums increased in all core lines of business. In transport insurance products, Green Card premiums grew the most. Transport and personal insurance continued to make up over 80% of the market’s premiums and 90% of its payouts.
Insurers remained profitable, according to data on January–September earnings. Six insurers were in breach of the solvency capital ratio (SCR) and/or minimum capital ratio (MCR). Three of the violators either have exited or are about to exit the market voluntarily. The violators represent only 2% of all assets.
Credit Unions
In Q3, credit unions’ number and assets kept on declining. Assets decreased for most non-deposit-taking credit unions. However, the assets of deposit-taking unions edged higher.
The volume of new loans declined 12% qoq due to a seasonal decrease in the volume of loans to agribusiness entrepreneurs. The volume of new consumer loans remained nearly unchanged. The loan portfolio shed 3% qoq and 7% yoy. The declared average percentage of loan principals overdue for more than 90 days shrank to 29%.
Though operationally inefficient, credit unions posted higher profits. In early October 2024, six unions were in violation of the capital adequacy ratio. Three delinquent credit unions left the market in Q3.
Finance Companies and Pawnshops
Finance companies’ assets added 6.4% qoq in Q3, even though 40 of these NBFIs had exited market, primarily by order of the regulator. The volumes of most of the main types of financial services, except for leasing, shrank significantly.
Retail loans grew in volume for the fifth consecutive quarter. The gross portfolio of loans to households has increased for seven straight quarters, while that of corporate loans decreased.
In January–September 2024, finance companies reported record profits compared to the same periods of the previous three years. About 80% of finance companies were profitable, while over half of the segment’s profit was earned by Ukrfinzhytlo, the state-owned operator of the eOselia program.
Pawnshops continued to scale up operations. The volumes of assets and new loans were slightly up. Revenues from financial services increased, and so the segment ended the quarter in the black.
Prospects and Risks
A common reason the NBU applies enforcement measures in the non-bank financial services market is because NBFIs violate AML/CFT and consumer rights requirements. These financial institutions need to pay more attention to how they manage relevant risks.
NBFIs should also focus on improving the quality and timeliness of reporting. New rules for the filing of reports have been in effect since the beginning of 2024. Starting with reports for January 2025, finance companies and pawnshops will provide data on regulatory balance sheets and off-balance sheet liabilities on a monthly basis, while currently they report quarterly.
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 filing Q3 reports, NBFIs were able to update the data they had reported for Q1 and Q2. Retrospective adjustments were therefore made to some of the indicators. Changes to the calculation methodology are reflected in the respective notes to the figures. The change in indicator developments may have also been driven by the reclassification of indicator components after the system migrated to new reporting forms. The calculation of changes to insurers’ performance indicators over a given period includes the data for insurers removed from the Register. This data covers the time until the removal date.
The next Non-Bank Financial Sector Review, covering Q4 2024 results, will be published in March 2025.