TRENDS OF THE DEVELOPMENT OF THE BANK CREDIT SERVICES MARKET TO INDIVIDUALS IN UKRAINE

Market of bank credit services has traditionally been a main component of the domestic market of credit services. For 2006-2008 Ukraine achieved an increase in the volume of bank loans granted to households. However, in 2009 this figure has already decreased in comparison with the previous year and at the same time the share of bank loans provided to households has reduced to the level of 2006. This is primarily due to the global financial crisis, when banks were forced to resort to rationing of credit. The decline in volume of credit services offered by depository corporations to individuals, continued in Ukraine also throughout the period 2010-2012. Negative processes in the credit sector, led to an increase of the problem loans’ share granted to individuals in the loan portfolios of depository corporations. It’s the sharp rise of dollar exchange rate that affected the increase of households’ problem debts to depositary corporations. This fact primarily increases the number of distressed mortgage loans granted before the ban of foreign currency lending to individuals. At the same time the lack of banks’ ability to realizatione quickly the mortgaged property is the factor of influence on the existence of significant amounts of bad debts on credits to households. The prevalence of consumer loans is one of the trends of the market of credit services to individuals in Ukraine. At the same time long-term loans have the largest share in the structure of credit services provided by depository corporations to individuals in Ukraine. In addition loans in foreign currency present a significant proportion of total Bank credit services to individuals. Thus, by the fall of 2008 the market of credit services to individuals in Ukraine experienced a credit boom that was a negative manifestation of credit expansion on the economy. In Ukraine the State should promote the rational and efficient households lending to avoid financial crisis as a consequence of the credit boom. Credit services to individuals provided by deposit domestic corporations have become less accessible to a large number of households. This is due to shortage of bank credit resources; decline in individuals’ demand for consumers credit services caused by reducing their creditworthiness; increase of credit risk for both lenders and borrowers. At the same time there is a reorientation of consumer demand for credit services to non-bank financial institutions, which are becoming competitors to depository corporations.