Two years of recession and periods of currency depreciation have put stress on Belarus’s banks. But some recovery is in sight, thanks to a slowly improving economic outlook, a monetary policy focusing on greater exchange rate stability and cautious steps towards the privatisation of a largely state-owned sector. Still, experts agree, the resolution of the banking sector's non-performing loan (NPL) ratio and a reduction of the economy’s high degree of dollarisation need to be addressed.
While the National Bank of Belarus, the country's central bank, does not report on NPLs in the sense of overdue loans, it does publish data on problem loans, relying on a more qualitative assessment of a borrower’s credit quality. Figures from 2015 and 2016 show that on average, problem loans have risen across the sector: from 7.3% in December 2015 to 14.7% at the end of 2016. And as demand for loans is still limited (although not contracting as in 2016), comprehensive strategies across banks are vital to reduce NPL ratios.