THE TRANSFORMATION OF UKRAINE'S BANKING SECTOR DURING THE WAR

Abstract

This article examines the characteristics of the Ukrainian banking system’s operations under martial law. It is substantiated that the full-scale invasion served as a catalyst for the financial and operational transformation of the Ukrainian banking sector. It has been established that bank customers' deposits more than doubled during the period of martial law. Both individual and business deposits grew at roughly the same rate. A study was conducted on the liquidity of the domestic banking system under martial law. The analysis indicates a high level of liquidity in the domestic banking system under martial law, as evidenced by a significant decline in loans received by banks from the National Bank of Ukraine. This study examines the state of bank lending in Ukraine under martial law. It demonstrates an improvement in the quality of domestic banks’ loan portfolios. This study examines the characteristics of changes in the structure of domestic banks’ assets and liabilities resulting from their adaptation to war-related risks. There has been a significant increase in banks’ investments in government securities and NBU deposit certificates, which has helped support the state budget and ensure the financial stability of the banks themselves. An analysis of the banking system’s capitalization during the war, based on the ratio of equity to net assets, indicates that banks have built up a sufficient safety margin to mitigate risks. The article emphasizes the important role of international financial assistance in ensuring macroeconomic stability in Ukraine and the financial stability of the banking sector under martial law. It has been established that digitalization and the development of remote services have become key drivers of transformation in Ukraine’s banking sector during the period of martial law. The adoption of online banking and mobile apps has enabled banks to ensure uninterrupted service, which is critically important in the context of hostilities and mass migration. Directions for the further transformation of the domestic banking system and its role in ensuring the post-war recovery of the national economy are identified.