Bank Portfolio Research Articles

Шляхи залучення фінансових ресурсів державними банками для відбудови економіки України

Introduction. The analysis of the availability and quality of financial resources involves identifying sources of funding, established practices of state-owned banks, international programs and funds, criteria for ensuring the quality and sustainability of reconstruction, urgent needs for funding and its availability, ensuring the participation of economic actors in the planning and monitoring of reconstruction programs, accountability mechanisms and ensuring economic, social and environmental sustainability. Problem Statement. The need to expand the sources of term resources on local and international markets, and to distribute them through a system of financial partnerships between state-owned banks and authorized financial organizations to support small and medium-sized businesses, requires coordinated actions among all stakeholders. Although households' long-term funds account for only a small share of the overall financing structure, they are becoming increasingly important in the context of globalization, especially in view of economic recovery and political stability. The purpose is to examine the volume, dynamics and structure of sources of funds raised by state-owned banks in the local market for the purpose of rebuilding Ukraine's economy. Methods. The study used a systematic approach, the principles of systematization of statistical and analytical data, graphical analysis, scientific synthesis, induction and deduction. Results. The article analyzes the volumes, dynamics and structure of attracting credit resources by state-owned banks in partnership with authorized financial organizations, in particular through the loan programs of the Entrepreneurship Development Fund (EDF) and the NBU's refinancing programs for commercial banks. It was found that the amount of resources attracted from the EDF is insignificant compared to the loan portfolios of state-owned banks. To access the EDF loans, state-owned banks invest in government debt instruments (government bonds), which is inefficient in terms of supporting economic recovery, as high interest rates on such instruments cause liquidity to flow into government debt obligations, which puts pressure on the state budget and additional default risks for issuers of such securities. Special attention in the study is paid to the analysis of the dynamics of customers' term deposits by banking groups, including state-owned and private banks, as well as banks with foreign capital. The dynamics of attracting funds from individuals and legal entities of state-owned banks in comparison with large private banks and banks with foreign capital is presented. This made it possible to assess how successfully banks maintain their liquidity and retain customer confidence. Conclusions. In times of war, state-owned banks play a key role in stabilizing the financial system. Business support programs, social payments, and government guarantees have made these banks important to customers, which explains the significant growth in deposit portfolios in 2023-2024. The volume of bank refinancing (collateral, terms, purpose) indicates a change in the NBU's strategy aimed at reducing banks' dependence on the central bank and moving to more market-based liquidity mechanisms. The gradual integration of Ukraine into the EU opens up prospects for state-owned banks to access large-scale and cheap financing under targeted programs, so it is advisable to orient the banks' resource policy towards the relevant mechanisms. In times of war and global uncertainty, state and international guarantees are an important tool for attracting additional financial resources. At the same time, this tool is used to a limited extent. Among the state-owned banks, only Ukreximbank has received direct guarantees from the Ukrainian government to secure creditors' claims. It is necessary to consider the possibility of attracting guarantees from international organizations as a less burdensome and more effective tool for expanding and reducing the cost of funding.

The effects of climate change‐related risks on banks: A literature review

AbstractThis literature review describes the recent empirical literature in economics and finance focusing on how climate change‐related risks affect banks, with a particular emphasis on microeconomic evidence. The comparison of empirical estimates shows that many studies project limited estimates of damages for banks. For both loan and bond spreads, most estimates of the effect of climate change are below 50 bp. In comparison, studies on stock markets document responses that are more substantial. In real estate markets, there is evidence of price effects notably for flood risks associated with sea level rise. However, some studies indicate that climate risks could be underestimated. We note challenges related to the measurement of adaptation potential, non‐linear changes in hazards and responses, and the aggregation of effects across studies, markets, and bank portfolios.

Commercial real estate exposure and bank counterparty risk

Detailed analysis of December 2023 bank regulatory data suggests that unrealised interest rate losses in the banking system amplify banks' true commercial real estate (CRE) loan concentrations making CRE exposures much more consequential than traditional supervisory CRE loan concentration measures suggest. Taken together, weak demand for several types of commercial properties, sustained unexpectedly high interest rates and the concentration of CRE loans in many bank portfolios may magnify the risk of many financial institution's uncollateralised exposures to bank counterparties.

RISKS OF INVESTMENT PORTFOLIO OF BANKS OF KAZAKHSTAN: PROBLEMS AND WAYS TO SOLUTION

The article examines the essence and classification of the definition of «market risk». It is noted that managing market risks in a bank is a complex and multifaceted process that requires constant analysis and monitoring of market conditions, and an important element of the market risk management system is the formation of an effective investment portfolio, which includes various assets with different levels of risk. This will allow you to control and minimize possible losses, and will also help the bank determine the optimal balance between risk and profitability, which will help increase its profits. Using modern data analysis methods, an analysis of the real average investment portfolio of second-tier domestic banks was carried out and an assessment of the generated conditional investment portfolio was given. Based on the study, problems were identified and directions for improving market risk management in the bank were given.

Panel Data Analysis in Identifying and Mapping Caused Factors of Financial Crises and Monetary Instability in Developing Countries

This study aims to reveal the extent of macroeconomic instability, which has the characteristics of a financial crisis and inflation. To test the hypothesis, researchers use fixed effects and random effects estimators to assess the presence of individual and temporal effects. Macroeconomic fundamentals, especially the risk of devaluation and a drop in economic activity can be seen as early warning signs of banks becoming less solvent. They also play a big role in explaining how deposits changed during the crisis. Our findings highlight the unique features of the convertible monetary regime, reinforcing the belief that debtors will enjoy permanent protection against devaluation risks. This perception encourages the dollarization of bank portfolios, thereby increasing the financial system's solvency risks. There is also evidence that the regulatory framework in this area is weak when it comes to the financial system's exposure to devaluation risks and public debt risks. This is especially true when it comes to an institutional framework that makes it hard for government funding to be changed into other currencies. We find that inflation is a very persistent process during periods of high inflation. However, with the decline in inflation after the implementation of the convertibility regime, its persistence reduced significantly. The results show that non-rational persistence is currently not very high, suggesting that the costs of designing the economy should not be either. We find that univariate models tend to perform better over very short horizons. The results suggest that there may be advantages to using a combination of different models, provided they are informative about the relationship between inflation and its short- and long-run determinants.

Особливості управління кредитним портфелем та кредитними ризиками комерційного банку в умовах необхідності стимулювання інвестиційних процесів в економіці

The article explores the theoretical and methodological aspects of managing the loan portfolio and credit risks of a commercial bank in the context of the need to stimulate investment processes in the economy. The article considers the essential characteristics of the loan portfolio of a commercial bank and allocates its key features with clarification of their economic content in terms of the qualitative aspect of formation and management of the pool of credit assets. The study examines current approaches to assessing the credit portfolio of a commercial bank, taking into account its key characteristics. Indeed, based on the results of monitoring the quality of the credit portfolio, it is possible to formulate a set of proposals for managing credit assets and assess the adequacy of measures implemented by the bank's management in the face of economic uncertainty to maintain competitive positions on the credit services market. A review of the dynamics of lending to non-financial corporations and households by maturity is carried out through the prism of the potential use of these borrowed financial resources to intensify the investment activity of economic entities.

Impact of Monetary Policy Rate on Conventional and Islamic Banking

Purpose: This study examine the role of banking portfolios based on religious philosophy i.e. Islamic banks in comparison of conventional banks of Pakistan to determine whether both of the portfolios of Islamic and conventional banks absorbs monetary policy shocks on the basis of bank specific religious philosophy.
 Methodology: The study collected quarterly data from 2005 to 2018 from the official sources of the central bank of Pakistan i.e. State Bank of Pakistan and tested by using econometric techniques. The variables include proxy of central bank Policy Rate, Gross Domestic Product and banking portfolios.
 Findings: The outcome of the study reveals that Islamic philosophy of banks do not contribute significantly in varying effects of monetary policy.
 Unique Contribution to Theory, Practice and Policy: The government may develop a dual monetary system and introduce pricing mechanisms for Islamic banks separately by introducing sharia-compliant monetary policy instruments to enhance Islamic share in the overall financial plan. Further, a limited number of Sharia advisors who are simultaneously equipped with financial knowledge in another handicap in sharia-compliant product development.

ՀՀ առևտրային բանկերի կապիտալի համարժեքության և իրացվելիության ռիսկերի գնահատում / Assessment of the Risks of Capital Adequacy and Realization of RA Commercial Banks

This article isdevoted to the assessment the current state of reliability and stability of RA commercial banks. The research presented situational problems arising from current global challenges, in particular, based on the financial indicators of the fourth quarter of 2023 interim reports, to assess the behavior of banks' capital adequacy and liquidity, as well as the main indicators characterizing the risks of normative capital, in case of a decline in the economic activity of the country, in case of unreliable classification of 5%, 10%, 20% and 30% of the credit portfolio of RA commercial banks, based on the financial indicators of the interim reports of the fourth quarter of 2023. The grounds of insolvency established by the banking legislation of the Republic of Armenia do not theoretically allow the formation of negative capital in banks, but in practice it is possible if the latter hide the real quality of assets in the financial statements.

ДЕРЖАВНІ БОРГОВІ ІНСТРУМЕНТИ З ВБУДОВАНИМИ ДЕРИВАТИВАМИ В УКРАЇНІ: АНАЛІЗ РИЗИКІВ

This article identifies key risks that investors in Ukrainian dollar-linked government bonds face, namely model risk, currency risk, volatility risk, interest rate risk, time risk. Most of the open literature on the subject of Ukrainian dollar-linked government bonds concentrates on the risks to the issuer (risks to the government finance). As this instrument constitutes a significant part of state-owned banks’ portfolios, it is of high need to understand the risks from the investors’ standpoint. It is noted that other developing economies are known to issue dollar-linked debt securities, for example Brazil, which also experienced investors’ the lack of confidence in local currency. Studies concerning indexed debt securities in Ukraine and worldwide are analysed. This research points out the most important in terms of valuation and risks analysis characteristics of Ukrainian dollar-linked government bonds. Fair value of Ukrainian banks’ portfolios of dollar-linked government bonds is decomposed into the value of plain bond, intrinsic value of embedded option and time value of embedded option. Key components of model risk for investors are identified, namely input risk and assumption violation risk. Risk metrics (Greek letters) of banks’ portfolios in dollar-linked government bonds are computed and compared between investor banks based on Black-Scholes fremework. Based on risk metrics, it is concluded that Ukreximbank faces the highest time risk (relative to its regulatory capital), while Privatbank’s portfolio is the most sensitive to changes in US interest rates. It is highlighted that time risk cannot be diversified or hedged, which should be accounted for by banks. Methods for management of identified risks are proposed. Risk factors’ contributions to revaluation if dollar-linked government bonds portfolios of banks during the first year of full-scale russian invasion of Ukraine are computed and compared between banks. It is noted that for deeper analysis of investor banks’ risks one should consider banks’ open currency position and changes in the costs and volume of funding.

Problems and Prospects of Consumer Lending Development in the Russian Federation

In the current situation, the issues of consumer lending development are extremely significant and become especially acute, since their relevance is obvious both for individuals acting as borrowers and banks, acting as the main creditor of the population, and the economy as a whole. With the help of a consumer loan, the population is able to eliminate the time gap between receiving goods (services) and paying for them, thereby satisfying their needs. The growth of consumer demand raises production processes, increasing market volumes, contributing to the development of the economy and improving the well-being of citizens. Consumer lending plays a key role in the activities of many commercial banks, microfinance organizations and consumer cooperatives, allows expanding the customer base, which compensates for credit risk, as well as generating a significant part of their income for these entities. At the same time, the assessment of trends in the consumer lending market demonstrates an increase in problems that need to be solved. Problems of debt burden of the population, high risks of loan portfolios of banks and other creditors (lenders), a dangerous share of overdue debts and a high value of interest rates on consumer loans, insufficient literacy of the population on financial issues - an incomplete list of problems, the solution of which can have a positive result only with a comprehensive approach — the participation of the state, creditors and borrowers. The main purpose of the article is to determine the prospects for the development of consumer lending in Russia, based on an assessment of its current state, identifying problems and ways to solve them.

The Impact of Transitory Climate Risk on Firm Valuation and Financial Institutions: A Stress Test Approach

Addressing recent calls by European regulatory and supervisory authorities, we develop a new bottom-up climate risk assessment method to examine the resilience of the European banking industry regarding transitory climate risks. We illustrate our approach by estimating the impact of a 50–100 EUR carbon tax per tCO2\\documentclass[12pt]{minimal} \\usepackage{amsmath} \\usepackage{wasysym} \\usepackage{amsfonts} \\usepackage{amssymb} \\usepackage{amsbsy} \\usepackage{mathrsfs} \\usepackage{upgreek} \\setlength{\\oddsidemargin}{-69pt} \\begin{document}$$\ extit{tCO}_{2}$$\\end{document} equivalent on the valuation and default risk of STOXX Europe 600 firms. For about 5% of the sample firms, we find asset devaluation shocks larger than 30% and for about 16% of the firms probabilities of default (PDs) dropping below investment-grade level of 3%. At the sector level, our results yield asset devaluations shocks of 15–36% and new PDs of 5–34% for the six most affected sectors. Running a stress test on credit risk based on these results, we find a decrease in capital ratios between -1.2\\documentclass[12pt]{minimal} \\usepackage{amsmath} \\usepackage{wasysym} \\usepackage{amsfonts} \\usepackage{amssymb} \\usepackage{amsbsy} \\usepackage{mathrsfs} \\usepackage{upgreek} \\setlength{\\oddsidemargin}{-69pt} \\begin{document}$$-1.2$$\\end{document} and -1.6\\documentclass[12pt]{minimal} \\usepackage{amsmath} \\usepackage{wasysym} \\usepackage{amsfonts} \\usepackage{amssymb} \\usepackage{amsbsy} \\usepackage{mathrsfs} \\usepackage{upgreek} \\setlength{\\oddsidemargin}{-69pt} \\begin{document}$$-1.6$$\\end{document} percentage points for key regulatory capital ratios in the most adverse scenario while only addressing 36% of the bank’s total risk-weighted assets. Our analysis sheds light on the substantial transitory climate risk for asset portfolios of banks and contributes to the pressing question how to integrate climate risk into risk management and regulation of financial institutions.

Premier Wallet: banking the unbanked population in Somalia

Learning outcomes Upon reading, analyzing and participating in the classroom discussion of this case study, students will be able to use the blue ocean strategy (mainly the Strategy Canvas tool) to analyze how companies establish their products as viable and the go-to solution for consumers; perform a competitive analysis for competitive products; learn how to use data from the case, including industry trends, to predict the future market position of products; and learn how to develop strategies for new products in the market. Case overview/synopsis Abdishakur M. Afrah, who served as the Head of Business Development at Premier Bank, oversaw a substantial banking portfolio, which included Premier Wallet – the first digital wallet in Somalia. This case study outlines Premier Wallet’s journey and its transformative impact on the banking sector. Owing to the mobile wallet, consumers could, for the first time, engage in purchasing, withdrawing cash, shopping online and topping up without needing a bank account at Premier Bank. This allowed for the financial inclusion of the unbanked Somali population. This case study also highlights the Wallet Send feature, a disruptive feature that challenged the prevalent Hawala system in Somalia. This feature enabled customers to send money across 110 countries via their smartphones, facilitating direct deposits to the mobile or bank accounts of their family and friends or to cash withdrawal points nearby. Despite these advanced features, Premier Wallet struggled with broader acceptance, hindered by a mere 9% internet penetration, the absence of a national identification (ID) system and stiff competition from WAAFI, a fintech application supported by Hormuud Telecom, Somalia’s leading telecommunications company. The case study also delves into the strategic decisions Afrah had to make to position Premier Wallet as the top mobile money option for consumers in Somalia. Complexity academic level This case study is suited for undergraduate-level courses. Supplementary materials Teaching notes are available for educators only. Subject code CSS 3: Entrepreneurship

The performance of bank portfolio optimization

AbstractGiven a liability structure, the bank portfolio optimization determines an asset allocation that maximizes profit, subject to restrictions on Basel III ratios and credit, liquidity, and market risks. Bank allocation models have not been tested using historical data. Using an optimization model based on turnover constraints, we develop such tests, which document the superior performance of optimization strategies compared to heuristic rules, resulting in an average annual out‐of‐sample outperformance of 15.1% in terms of return on equity using our data set. This outperformance is remarkable and contrasts with the reported underperformance of several portfolio optimization methods in the case of investment management.

Impact of Restructuritation Strategies and Financial Instruments for Loan Loss Provision

When the COVID-19 pandemic started in April 2020, there was a swift change for portfolio banks in the lending sector. Loan at risk still dominated all of the lending portfolio banks. As a result, the quality of the portfolio and bank assets is getting worse. Furthermore, the banking industry is advised to continue paying attention to the adequacy of loan loss provisioning for impairment losses in anticipating the potential for deteriorating credit quality. The condition of the banking business portfolio, especially in the lending sector, is experiencing worsening conditions due to the COVID-19 pandemic. Loan loss provisioning as the bank’s anticipation of the risk of losing productive assets could contribute in a significant way to the financial crisis in the banking sector. This study analyzes the restructuritation, bank size, capital, inflation, operating expenses management, and productivity growth on loan loss provision. Data collection is done by recording every data needed from The Financial Services Authority (OJK) in the audited financial report. The data were collected for five years quarterly from Q2 2017–Q4 2022, with the object of research being ten banks of group BUKU IV. In total, there are 220 data observations. The dependent variable in this study is loan loss provision. Moreover, the independent variables in this study are restructuritation, bank size, capital, inflation, operating expenses management, and productivity growth. This study uses a quantitative approach with an explanatory or causal design. The data analysis used in this study is panel data regression with the help of the EViews 13 program. The results show that restructuritation policy, inflation rate, and bank size during the COVID-19 pandemic have a significant positive impact on loan loss provision. However, capital bank productivity growth before the COVID-19 pandemic occurred. Also, the operating expense management during the restructuring policy implementation period significantly negatively affects loan loss provision.

Expected impact of the bankruptcy of leading foreign banks on the banking system of Ukraine

The purpose of the article is to study the problems associated with the possible unfolding of the banking crisis in the USA and European countries, the content of state regulatory measures aimed at ensuring the financial stability of Ukrainian banks, which will be implemented consecutively from February 2022, the justification of additional, most urgent measures aimed at overcoming existing problems in the country’s banking system. General scientific and special methods are used: analysis, synthesis, grouping, description, comparison, theoretical generalization and abstract-logical. In the course of the research, it was concluded that the bankruptcy of some leading foreign banks should not have a significant negative impact on the banking sector of the Ukrainian economy. The article also discloses the content of state regulatory measures aimed at ensuring the financial stability of Ukrainian banks, which include the implementation of full (regardless of the amount and currency) state guarantee of bank deposits of individuals, providing banks with the required amount of refinancing, a radical increase in the discount rate, active accumulation of international reserves, withdrawal of problem banks from the market, activation of the use of norms of mandatory reservation of funds raised by banks, reduction of the rate on overnight deposit certificates, activation of the work of the Financial Stability Council. The positive consequences of the implementation of a set of measures to support the banking system of Ukraine were determined, in particular: a decrease in inflation rates, strengthening of the hryvnia exchange rate, preservation of profitability of the banking system, gradual restoration of bank capitalization. Problems that require the adoption of additional regulatory measures by the state are highlighted, namely the increase in the share of problem loans and the actual suspension of credit activities of banks. A number of measures are proposed within the framework of improving the current monetary policy of Ukraine: development of the mechanism of “emergency” refinancing of banks in case of rapid spread of crisis phenomena; unconditional adherence to the policy of “expensive money”; limitation of emission and money supply growth rates; restoration of the practice of compulsory sale of a part of the foreign currency earnings of exporters; ensuring further “fine-tuning” of the current method of mandatory reservation of the funds involved; settlement of the “new” NPL management procedure; creation of a specialized state institution for the management of problem assets to accept NPL portfolios of state banks on the balance sheet. The results of the research can be used at the level of the National Bank and the government in the process of forming urgent measures in the field of monetary policy implementation.
 JEL classіfіcatіon: E31, E40, E42, E50, E52, F31, F35

On the relationship between corruption and bank lending activity: European evidence

PurposeThis paper aims to study the effect of country-level perceptions of corruption on commercial banks’ lending activity over the importance of loans and the quality of loan portfolios of banks in Europe.Design/methodology/approachThe paper uses country-level perceptions of corruption scores from Transparency International, individual bank-specific data from ORBIS and macroeconomic data from the World Bank. The sample is composed of 640 commercial banks in 42 European countries from 2013 to 2019. The authors estimate, by pooled OLS, the relationship between corruption and the importance of loans and the quality of the banks’ loan portfolios. In addition, several robustness tests reinforce the results.FindingsThe results show that corruption negatively impacts the importance of loans in bank assets and positively impacts the proportion of bad loans. In addition, trade openness increases the weight of loans and the weight of nonperforming loans. Bank size, capital and risk also affect bank lending activity. Finally, European Monetary Union (EMU) membership reinforces the negative (positive) effect on loans (bad loans).Research limitations/implicationsThe results highlight the importance of fighting corruption. Governments, regulators and banks benefit from pursuing transparency-oriented policies to decrease the perception of corruption and foster economic development.Originality/valueThe literature on the impact of corruption on bank lending activity focuses mainly on high-corruption countries. This paper studies the European case, scarcely investigated in the literature, in the aftermath of two international financial crises and when significant regulatory transformations in banking supervision were instituted in the EMU countries.

The Characteristics of Song Copyright in Bank Debt Guarantees

By focusing on the Indonesian context and based on Law Number 28 of 2014 concerning Copyright, this study analyzes the characteristics of copyright to songs as assets that can be pledged as collateral, as well as the impacts and implications of copyright utilization in the financial sector and creative industries. The results of the research show that copyright has the potential to be used as collateral in debt transactions at banks. Factors such as the economic value of the work, exclusive control, legal protection, and regular income allow copyright to be used as collateral. Copyright law regulates the process of guaranteeing, utilizing, and executing copyright as security. The use of copyright as collateral has a positive impact on the financial sector and the creative industry. Diversification of bank portfolios, easier access to finance for creative industry players, as well as increased innovation and creativity are the identified impacts. However, there are also challenges, such as complex copyright value assessments and potential conflicts of interest between rights owners and financial institutions.

Optimal Loan Portfolio under Regulatory and Internal Constraints

The environment surrounding banks is becoming increasingly severe. Particularly, to prevent the next financial crisis, Basel III requires financial institutions to prepare higher levels of capitals by 1 January 2028, and the financial stability board (FSB) suggests the risk appetite framework (RAF) as their internal risk management. Hence, efficient usage of their own capitals for banks is more important than ever to improve profitability. Under such circumstances, this paper is the first to consider an optimization problem for a typical loan portfolio of international banks under comprehensive risk constraints with realistic profit margins and funding costs to achieve an efficient capital allocation. Concretely, after taking concentration risks on large individual obligors into account, we obtain a loan portfolio that attains the maximum profit under Basel regulatory capital and loan market constraints, as well as internal management constraints, namely, risk limits on business units and industrial sectors. Moreover, we separately calculate credit risk amounts of the internal constraints in terms of regulatory and economic capitals to compare the optimized profits. In addition, considering sharp increases in default probabilities of all obligors as in the global financial crisis, we perform a stress test on the optimization results to investigate the effects of changes in risk amounts and profits. As a result, we propose to unify risk constraints on the business units and industrial sectors by using credit risk amounts in terms of economic capitals.

Owner‐occupancy fraud and mortgage performance

AbstractWe identify occupancy fraud—borrowers who misrepresent their occupancy status as owner‐occupants rather than investors—in residential mortgage originations. Unlike previous work, we show that fraud was prevalent in originations not just during the housing bubble but also persists through more recent times. We also demonstrate that fraud is broad‐based and appears in government‐sponsored enterprise and bank portfolio loans, not just in private securitization; these fraudulent borrowers make up one third of the effective investor population. Occupancy frauds obtain credit at lower interest rates, suggesting a motivation for undertaking fraud. These fraudulent borrowers perform substantially worse than similar declared investors, defaulting at a 75% higher rate. We also provide evidence consistent with fraudulent borrowers’ defaults being more “strategic,” suggesting that this population poses a risk in the face of declining house prices.

Тенденції зміни рівня непрацюючих кредитів у портфелі банків-кредиторів сільського господарства в умовах війни

The purpose of the article is to analyze and assess the level of nonperforming loans in the portfolio of the TOP-14 banks that are most actively lending to agriculture. It is substantiated that problem loans of banks should be considered as one of the most important indicators of the state of the economy. The balances of funds on non-performing loans in the total volume of bank loans provided to agriculture in 2023 were analyzed. The main banks – "collectors" of problem loans in agricultural lending have been identified. Banks with the smallest share of problem loans to agriculture are presented. The dynamics of the volume and share of non-performing loans in agriculture in the portfolio of banks included in the study sample is shown. The share of non-performing loans in agriculture in national and foreign currency in the portfolio of non-performing loans of the analyzed banks was determined. It is substantiated that state and most commercial banks prefer lending to agriculture mainly in the national currency. There is an increase in the share of non-performing loans in the whole banking system of Ukraine for the period 2018-2023. On the basis of statistical data, methodological approaches are proposed in the context of the work of banks with bad debts.