Non-bank financial service providers, including finance companies, insurers, and pawnshops, saw their assets increase in Q4 2024, the latest Non-Bank Financial Sector Review shows.
The combined assets of non-bank financial service providers rose by 6.8% in Q4. Specifically, those of finance companies grew by 7.7%, insurers by 3.8%, and pawnshops by 2.2%. In contrast, credit unions’ assets declined in volume. The share of NBU-supervised NBFIs in financial sector assets declined to 10.2% during Q4.
Insurers
Life insurers’ assets increased by 5% in Q4 and by 14% in 2024, while non-life insurers’ assets grew by 3% and 11%, respectively. The share of the ten largest non-life insurers by insurance premium volume expanded to 71% from 65%. In the life insurance market, the largest insurer took up almost 50% of the market in terms of insurance premium volume.
Insurance premiums of non-life insurers edged higher by only 1% qoq in Q4, slowing down seasonally, but added 15% yoy. The volume of insurance premiums exceeded 2021 levels. Life insurers’ premiums accelerated their growth to 17% qoq in Q4, gaining 5% yoy.
Non-life insurers reported a 2024 net profit of UAH 2.5 billion, up 31% from a year ago. Return on equity rose by 4 pp, to 14%. Life insurers’ profits more than doubled year-on-year – to UAH 1.4 billion – due to a gain reported by a large insurer, but return on equity remained almost flat.
As of the end of 2024, all insurers complied with the solvency capital requirement (SCR) and the minimum capital requirement (MCR). For three companies, the SCR was in the 100%–120% range.
Credit Unions
Credit unions’ assets decreased faster in 2024 than a year earlier, by 5%. They accounted for about 60% of the 2021 volumes, according to end-2024 data. In Q4, the loan portfolio decreased by 4% qoq and by 8% yoy.
Because of the materialization of credit risk and an increase in provisioning in Q4, credit unions incurred losses, reducing the segment’s 2024 profitability.
Credit unions’ losses led to a small decline in equity in Q4. Meanwhile, deposits decreased after part of them was repaid to depositors and a number of unions exited the market. By contrast, additional share contributions edged higher.
As of early 2025, three credit unions were in breach of the capital adequacy ratio.
Finance Companies and Pawnshops
Finance companies’ assets rose by 7.7% qoq and by almost a quarter year-on-year. In 2024, the volume of almost all financial services increased, but remained lower than before the full-scale war.
The volume of retail loans declined by 5.5% qoq after a long period of growth. The volume of loans made to businesses fell by more than a quarter.
Financial leasing transactions grew in volume for three straight quarters, adding 15% qoq and 45% yoy.
Factoring volumes increased. Conventional factoring transactions to finance receivables made up about a quarter of all operations.
The volume of guarantee transactions decreased quarter-on-quarter, but doubled year-over-year.
About 86% of finance companies were profitable in 2024. Almost half of the segment’s profit was earned by Ukrfinzhytlo PrJSC – the operator of the eOselia program – as it earned interest on the domestic government debt securities in its capital. However, even without taking Ukrfinzhytlo PrJSC’s gain into account, the segment’s profits for 2024 surged to 2.4 times the 2023 level.
The volume of new pawnshop loans decreased quarter-on-quarter, but almost doubled year-over-year. Although profitability indicators were at their lowest since the beginning of the year, the segment was overall profitable in 2024.
Prospects and Risks
Starting in 2025, in line with NBU requirements, finance companies must set up comprehensive, adequate, and effective internal control systems by taking internal-audit, risk-management, compliance-control, and other measures to ensure efficient management of operational, compliance, and other risks.
Effective 1 January 2025, a system of indicators has been introduced for regulatory consolidated and sub-consolidated reporting by non-bank financial groups. Amendments to the Reporting Rules also require that finance companies and pawnshops migrate from quarterly to monthly submission of all reporting, starting with that for July.
The Non-Bank Financial Sector Review is a report that was first published by the NBU in October 2020. It focuses on the activities of NBU-regulated non-bank financial institutions, such as insurers, credit unions, finance companies, and pawnshops. The review highlights key developments in the non-bank financial market and provides comprehensive insights into its performance.
Along with submitting Q4 2024 reports, NBFIs could update their reporting data for Q3. Retroactive adjustments were therefore made to some of the indicators. Any changes in the indicator calculation methodology are reflected in the notes accompanying the figures. A reclassification of reporting components that was conducted by market participants as they migrated to new reporting forms might also have affected indicator dynamics.
The next Non-Bank Financial Sector Review, covering Q1 2025 results, will be published in May 2025.