Best bank: PrivatBank
Giving state-owned lenders awards for commercial banking is typically something Euromoney is reluctant to do, especially in former Communist countries. But anyone who knows Ukraine knows that PrivatBank is not your average former Soviet state-owned bank.
Largely thanks to early investments in technology, PrivatBank is by far the biggest bank in Ukraine, with 18 million customers. It claims that more than half the bankable population uses PrivatBank as their main bank and it has a 36% share of retail deposits and a 38% of retail loans. Yet in stark contrast to Russia’s Sberbank, for example, PrivatBank has only been state owned since 2016.
After its nationalization, PrivatBank underwent a major overhaul in its governance, staff, risk systems, products and business model. It has received recognition from a variety of sources for the work it did in these areas before the full-scale Russian invasion in 2022. The bank won Euromoney’s best bank transformation award in 2020, for example, although there was much work still to be done.
Since the war, this transformation – in its business model, IT and other areas – has accelerated, according to chief executive Gerhard Boesch.
Shortly after the invasion, for example, the bank decided to embark on an extraordinarily rapid transfer of IT operations to the cloud. Previously, Ukraine’s regulatory framework meant banks had to store their data on servers inside Ukraine, which left them vulnerable to bomb damage and other extreme operational risks. PrivatBank has since been the subject of a case study for fast-paced cloud migration by Amazon Web Services.
Cloud migration was just one way in which the bank moved to ensure its stability and continuity of services in the face of Russian aggression, bombing and electricity blackouts.
Before nationalization, according to Boesch, PrivatBank was far too reliant on the asset side on one product in retail banking, credit cards. He says the bank sold credit cards very successfully and profitably, but there was a desperate need to diversify, something the bank had already begun to do before 2022 in areas such as consumer finance and car loans, as well as building up a better basis for expanding small and medium-sized enterprise lending.
Boesch says the 2022 invasion has only served to accelerate this transformation of the business model; not least because it was inevitable that internationally owned banks would not lend as much as local banks – whether private or state-owned – after the invasion.
In a recent presentation on its results, PrivatBank showed that its share of retail lending rose from 26% at the end of 2021 to 38% at year-end 2023. Its share of SME lending has also increased, Boesch says, to the extent that it is today the country’s largest SME bank. Although state-owned Oschadbank has a similar share, PrivatBank’s share in SMEs was much lower before its accelerated transformation.
At the same time, Boesch insists the bank has not lowered its underwriting standards.
After ramped up provisions in 2022 – going far beyond writing off collateral in occupied territories – PrivatBank ended up releasing provisions in 2023. Clearly, part of the Ukrainian banks surprisingly resilient asset quality is to do with working alongside clients in difficulty.
PrivatBank had a pre-tax profit of Hrn72.8 billion ($1.79 billion) in 2023. Even after increased taxes on banks, the net result was Hrn7.8 billion, allowing it to distribute a dividend of Hrn30.2 billion to its shareholder, the Ukrainian state. But Boesch says that hasn’t stopped him preparing for the bank for privatization, whether in its cost structure, balance sheet or business model.
Those who know PrivatBank say its culture has long been commercially focused. Boesch has tried to keep that element of the culture intact, even while improving its governance and audit functions, compliance and risk management. “You don’t find the typical bureaucracy of a state institution here and we want to keep it like that,” he says.
Best international bank: Raiffeisen Bank Ukraine
Raiffeisen Bank Ukraine solidified its position as Ukraine’s largest foreign bank in 2023 with a 6.7% market share.
Notably, it expanded its foreign financing initiatives through strategic partnerships with the European Bank for Reconstruction and Development, the Export Credit Agency of Ukraine, the US International Development Finance Corporation and US Agency for International Development. The introduction of loans in Polish zloty for exporters to Poland bolstered foreign currency revenue financing and supported exporters exploring new markets.
The bank launched the MyRaif app in 2023, serving 180,000 active customers by the year end with features like remote account opening and transaction management. The bank’s virtual assistant, Rea, improved customer service through its interactive chatbot.
The bank made contributions to humanitarian aid with donations valued at approximately Hrn300 million ($7.35 million) in 2023. It created 800 jobs for war-displaced individuals and implemented comprehensive support programmes for veterans, boosting job security and social reintegration.
Best digital bank: PrivatBank
PrivatBank has a 64% market share in merchant acquisition in Ukraine and dominates the tap-to-pay technology sector. This technology is currently used by 7% of merchants in the country.
The bank saw growth in terminal application usage among merchants last year, with downloads increasing nearly fivefold from 14,000 to 48,000.
The bank launched the Terminal for iPhone facility, making Ukraine the fourth country in Europe and seventh globally where businesses can accept card payments solely through an iPhone, without needing traditional point-of-sale terminals. This facilitated 7.8 million transactions, totalling more than Hrn3.2 billion ($78.4 million) in 2023. Grocery stores led in transaction volumes, with nearly 600,000 payments, followed by catering establishments with 420,000 transactions.
Best bank for SMEs: PrivatBank
PrivatBank made significant progress in small and medium-sized enterprise banking in 2023 with Hrn29.9 billion ($732 million) in financing and over 24,000 new loans issued. This was helped by its €240 million agreement with the European Bank for Reconstruction and Development (EBRD), the largest to date for the bank. It has drawn down an initial €120 million tranche and negotiated an additional €300 million for 2024. The EBRD has also supported grants offering cashback incentives for investments in green equipment.
The bank’s introduction of a tax-payment system for merchants on point-of-sale and Android-based terminals drove growth in monthly account openings, which reached 27,000 in September 2023.
The bank also maintained a leading position in payment solutions, with good market shares across various products like cards (64%), ATMs (55%) and accounts for both individual and business customers.
Best bank for ESG: Ukreximbank
In 2023, Ukreximbank made progress in environmental, social, and governance (ESG) initiatives last year.
The bank signed a loan agreement with the European Bank for Reconstruction and Development, enabling financing for enterprises and municipalities affected by the war. It extended funding to the Dnipro City Council to enhance residential building facades, overhaul roofs for thermal modernization and repair housing. These efforts prioritize community projects such as infrastructure restoration and energy-efficient equipment procurement.
The bank also facilitated access to financial support through programmes like the government’s Affordable Loans 5-7-9% scheme and state-guaranteed loans. This initiative ensures that the bank’s clients, including those without sufficient collateral, can get access the schemes.
The bank secured loans from the Entrepreneurship Development Fund to bolster agricultural enterprises, specifically supporting greenhouse and horticulture development, and promoting sustainable development and economic stability.
Best bank for corporate responsibility: PrivatBank
PrivatBank donated Hrn307.5 million ($7.5 million) to charitable initiatives in 2023. It also raised Hrn48 million to provide essential equipment and medicine to 34 hospitals and clinics across 11 regions of Ukraine.
As a member of the Business without Barriers community, it supported an international sociological study on mental health conducted by the UK agency Alligator Digital across 11 countries. On World Mental Health Day, October 10, 2023, the bank organized an interactive campaign in Kyiv, involving over 100 passers-by in a street mood survey. Participants received mental health advice and had the opportunity to consult with a professional psychologist at the bank’s Concept Store. This initiative reached an audience of over 720,000 people.
Best bank for corporates: Ukrgasbank
In 2023, Ukrgasbank collaborated with the Ukrainian and UK governments, international insurers, and insurance broker Marsh on a unique agreement to insure ships in the Black Sea. This initiative enhances the sea route’s accessibility for a wide range of exporters and plays a crucial role in securing trade routes during wartime.
The bank issued an export credit agency-backed $10 million letter of credit with a term of up to three years for a UK-insured party to insure vessels and their cargo entering and leaving Black Sea ports. This letter of credit also covers the associated transportation risks.
In 2023, the bank’s trade finance portfolio exceeded Hrn15.9 billion. The bank executed 740 trade finance transactions, including 661 guarantees and 79 letters of credit. It also facilitated 81 trade finance transactions worth $234.7 million through the European Bank for Reconstruction and Development and 21 transactions totalling $80 million through the International Finance Corporation.
