Ukraine’s Central Bank Unveils 2025 Bank Stress-Testing Scenarios

How Ukraine Stress-Tests Its Banks: Lessons Learned

According to НБУ: At a recent meeting of the Basel Consultative Group (BCG), Pervin Dadashova, Director of the Financial Stability Department at the National Bank of Ukraine (NBU), outlined Ukraine’s approach to bank stress testing. Since 2018, the NBU has been actively assessing bank resilience using a proportional method that focuses only on the largest institutions. The stress scenarios are updated annually and are risk-based, keeping evaluations relevant in a fast-changing market environment.

Why Stress Testing Matters

Stress testing is a critical tool for preparing banks to weather potential crises. In Ukraine, this process has continued without interruption, even during the full-scale invasion. The resilience assessment includes an Asset Quality Review (AQR) followed by stress testing. The NBU selects the largest banks based on criteria such as:

• risk-weighted assets;
• retail loan volumes;
• deposits.

Only institutions that previously showed elevated required capital levels undergo stress testing. In 2019, the adverse scenario featured a severe shock to the retail credit portfolio, driven by its rapid growth and weak credit risk management practices. In 2021, the scenario centered on interest rate risk materializing from investments in securities, including government bonds. For 2025, the focus will shift to interest rate risk in the banking book.

The BCG provides a forum for regulators from countries that are not members of the Basel Committee on Banking Supervision (BCBS) to share insights and best practices on banking and financial stability. The NBU remains committed to refining its stress-testing framework to address emerging challenges and evolving financial market conditions.

By actively participating in the Basel Consultative Group, Ukraine demonstrates its engagement with the international banking community and its dedication to adopting modern risk management practices. Stress testing serves as a vital mechanism to safeguard the financial stability of the banking system, even under difficult circumstances, underscoring its importance for the country’s economic resilience.

As the National Bank of Ukraine continues to enhance its stress-testing framework, it is also achieving significant financial milestones. Recently, the NBU reported a record profit of 153 billion hryvnias, raising questions about how much of this will contribute to the state budget. Understanding the implications of these financial results can provide deeper insights into the resilience of Ukraine's banking sector during challenging times. For more details on this record profit and its potential impact on the economy, visit the latest financial updates.