Ukrainians' debts for microcredits increased by 1.4 billion hryvnias in 2023

In Ukraine, from January to September 2023, there were 6 million new credit agreements totaling 29.1 billion hryvnias. This is already more than the entire year of 2022, but 1.8 times less than the same period in 2021 when Ukrainians took 10.8 million microcredits totaling 48.4 billion hryvnias.

On average, in the third quarter of this year, there were 715 thousand new microcredits registered per month. Compared to the decline at the beginning of the full-scale war, the number of new loans in microfinance institutions has increased this year. However, it’s still 1.7 times less than the corresponding monthly averages in 2021 (1.23 million).

In 2023, the number of agreements being made increases by 7% every quarter.

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In the third quarter, the average size of microcredits reached a new high—4985 hryvnias. This is the biggest amount since the beginning of the full-scale war and almost one-third more than in the same period in 2021.

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The debt for microcredits continues to grow: +6% in the quarter. As of the end of September, Ukrainians owed 9.44 billion hryvnias to microfinance institutions. Despite Ukrainians actively paying off their debts throughout 2022 and significantly reducing the total debt amount, it has increased again this year by 1.4 billion hryvnias. It’s worth noting that more than half of the new debts — 757 million hryvnias — were incurred in the first quarter of this year.

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The background

On November 22, the Verkhovna Rada is the Ukrainian parliament passed the National Bank of Ukraine (NBU) — initiated bill 9422 regarding responsible lending and effective regulation in the non-banking financial services market.

The new law will help regulate the microfinance institution: it will limit interest rates for loans and reduce excessive debt burden on individual borrowers.