Analyzing the Problematic Indebtedness of Banks

• Main Authors: Marchenko Olha V., Nevidoma Liudmyla O.
• Format: Article
• Language: English
• Published: Research Centre of Industrial Problems of Development of NAS of Ukraine 2018-11-01
• Series: Bìznes Inform
• Subjects: banking system; problematic indebtedness; crediting; credit portfolio quality; debt management
• Online Access: http://www.business-inform.net/export_pdf/business-inform-2018-11_0-pages-402_408.pdf

A stabilization of the financial and economic situation in the country in the current economic conditions is impossible without a developed, reliable and efficient banking system that could provide the necessary volumes of crediting to the real sector of economy. However, excessive number of problematic credits and, as a result, poor quality of credit portfolios can lead to a number of negative consequences in the bank’s work, preventing it from performing even its basic functions. The publication researches the approaches to definition of the concept of «problematic credit» and generalizes the basic views on essence of the problematic credit. The changes of both the volumes and the share of problematic credits in credit portfolios of banking institutions over the last five years are analyzed and the reasons of their growth are determined, the main among which are: recognition of the non-working credits after nationalization of the Privatbank and new rules of the NBU regarding the evaluation of problematic credits. The main strategies of the bank’s problematic debt management are considered, each of which provides the possibility to use a large number of methods and instruments, available are in the banking practice.