Ukraine's bank profits fell by a third in January-August under a 50% profit tax, and the central bank is fighting a bill to keep the rate in 2027.

The banking sector earned a net UAH71.7bn ($1.58bn) in the first eight months of 2026, down 32.7% from UAH106.4bn a year earlier, according to National Bank of Ukraine (NBU) data. The fall is all tax. Pre-tax profit rose 5.3% y/y to UAH143.1bn ($3.16bn), while the profit-tax charge more than doubled to UAH71.5bn ($1.58bn) from UAH29.5bn, so banks now hand the state about as much as they keep.

The 2027 rate sets a treasury that has come to rely on bank tax as one of its few dependable wartime revenue lines against a central bank that wants the money kept as capital to fund the longest lending expansion in more than 15 years. Net hryvnia loans to companies grew by more than 32% y/y in September and loans to households by 38%, the NBU said with its rate decision on October 29.

Taxing 2027 profits at 50% could cap the sector's profitability, weaken its ability to build capital and hold back lending, NBU Governor Andriy Pyshnyi told a monetary policy press briefing the same day. Return on equity fell to 22% in January-August, and to 16% at privately owned banks, he said. A year earlier the sector's return on equity stood at 39.6%, the regulator's figures show.

"The NBU and the banks are well aware of their level of responsibility. If we are talking about the need to develop lending, we have to understand that the guarantee of its sustained and rapid development is strong capital, and the key source of that capital in a protracted war is bank profits. If we want to keep supporting credit expansion and the momentum of European integration, we need a substantive expert discussion," Pyshnyi said.

If profits are taken again, banks will not be able to grow their loan books faster than 15-20% a year even if profitability holds at current levels, the NBU said. Its June Financial Stability Report warned that the higher tax drags returns down to the level of European banks operating in peacetime, which puts at risk attempts to bring investors into the sector, including the privatisation of state banks. The finance ministry hired Rothschild in October to prepare the sale of state stakes in Ukrgasbank and Sense Bank.

The Verkhovna Rada backed bill No.15262 at first reading on October 27 with 265 votes, Forbes Ukraine reported. Drafted by a group of MPs led by Danylo Hetmantsev, chairman of the parliamentary tax committee, the bill keeps the 50% rate in 2027 and bars banks from reducing taxable profit by past years' losses. The committee estimates it would raise about UAH50bn ($1.1bn) of extra budget revenue in 2027.

The 50% rate was first applied to 2023 profits and again to 2024, before banks returned to the standard 25% bank rate in 2025. Parliament raised it again for 2026 over the objections of the NBU and the finance ministry, after the IMF agreed not to oppose the measure. The NBU has also raised its forecast of its own profit transfer to the 2027 state budget to UAH70bn ($1.54bn) from UAH49bn.

State banks hit hardest

The four biggest state-owned lenders, PrivatBank, Oschadbank, Ukreximbank and Sense Bank, earned a combined UAH14.14bn ($312mn) in the third quarter, down 39.6% from UAH23.43bn a year earlier, according to their interim financial statements, financial portal Kurs.com.ua reported. State banks held 50.3% of the sector's net assets in the second quarter.

PrivatBank, the country's largest lender, remained the most profitable, though its quarterly net profit fell 21.7% y/y to UAH12.34bn ($272mn). Oschadbank's third-quarter profit dropped to UAH583.3mn ($12.9mn) from UAH4.19bn a year earlier and was 59% below its second-quarter result. Its pre-tax profit shrank to UAH1.42bn ($31mn) from UAH5.69bn as it set aside UAH933.6mn of provisions for expected credit losses, against a UAH1.23bn release of provisions a year earlier, even as net interest income rose 3% to UAH8.44bn. Sense Bank earned UAH1.12bn ($25mn) in January-September, against UAH2.64bn a year earlier.

Ukraine banking sector net profit, full year and January-August, 2021-2026, UAH bn. Source: NBU. IntelliNews

Sector profits have swung hard since the full-scale invasion. Net profit collapsed to UAH21.9bn in 2022 from UAH77.4bn in 2021, then recovered to UAH83.0bn in 2023 and UAH90.9bn in 2024 and hit a record UAH126.5bn ($2.79bn) in 2025. In the two earlier 50% years the full-year result came in far below the January-November total, at UAH83.0bn against UAH130.6bn in 2023 and UAH90.9bn against UAH131.1bn in 2024, as the tax charge was booked in December.

Source: NBU (income and expenses of Ukrainian banks; main indicators, return on equity as at September 1). IntelliNews

This article was produced with the help of IntelliNews Lambda analytical tool