A comprehensive overview of the cards, payments and consumer banking market in Ukraine. The population of Ukraine decreased from 46 million at the end of 2008 to 43 million at the end of 2015. An ageing population, low birth rate and high emigration (due to the conflict with Russian-backed separatists in Eastern Ukraine) are the primary reasons for this decline. According to UN forecasts, the population is forecast to drop to about 39 million by 2030.
Economic conditions have been deteriorating since 2014 due to the political turmoil resulting from the annexation. This unrest has resulted in currency depreciation, increasing domestic debt, and high inflationary pressure accompanied by a drop in real household income. Ukraine's economy declined by 9.9 percent in 2015 after a 6.8 percent fall in 2014.
Payment cards are the main non-cash payment tool in Ukraine, while the use of direct bank transfers and cheques is less common than payment cards. Since 2011, usage of payment cards at the POS has been increasing, with rising awareness levels among Ukrainians, technological advancements, a growing e-commerce market and the increasing popularity of contactless payments in the country. Debit cards are the most popular form of payment card in Ukraine, accounting for 80 percent of total cards in circulation and 91 percent of billed volume in 2015.
Pre-tax profits on Ukrainian credit cards declined to $55 million at the end of 2015. Profit per card decreased from $29 in 2013 to an estimated $8 in 2016. This trend is forecast to take a positive turn, with profit per card expected to reach $10 by the end of 2018.
TABLE OF CONTENTS
Demographics and Economy:
Outlines the key metrics and trends which influence the development of retail banking and payments in the country:
Explores the structure of the local banking system, its infrastructure and the leading players. Data includes:
Overview of consumer finance in the country. Categories analysed include:
Industry-leading credit card coverage. We detail the past present and future of the industry through our data and commentary, including:
Demographics and Economy
Over two-thirds of Ukraine's population live in urban areas. The industrial regions in the east and southeast are the most populated parts of the country. At the end of 2015, males made up 46.3% and females 53.7% of the total population, while those aged 15 or older comprised 84.7%
Ukraine is a mixed economy with limited private freedom combined with centralised economic planning and government regulation. Agriculture is one of the major revenue generating sectors, contributing nearly 10% to total GDP. Ukraine's main trading partners are Russia, China, Germany,
Egypt, Belarus and Poland.
Ukraine's retail banking sector is highly concentrated, with the top five banks accounting for 54% of the total banking assets at the end of 2015. The top five banks in terms of assets are PrivatBank, Oschadbank, Ukreximbank, Ukrsotsbank and Sberbank of Russia
Consumer Finance Market
The biggest consumer lenders in the country are PrivatBank, Ukreximbank, Oschadbank, Raiffeisen Bank Aval and Ukrsibbank. All these banks have branch networks spanning the majority of the country, and this wide distribution has provided them with a competitive advantage over smaller operators.
Cash is still the prevalent payment tool in Ukraine, with about 85% of the total transaction volume in the country being made using cash in 2015. The widespread existence of a shadow economy
is one of the major reasons for the high cash usage in the country. Unofficial wage payments (in cash) are still common.
The prepaid cards market in Ukraine is at a nascent stage of development, with a low penetration level, estimated to be around four cards per 100 adults at the end of 2015.
Credit card activity in Ukraine is significantly lower than that of debit cards. The absence of
a well-developed revolving credit cards market and huge volume of inactive cards (49%) has restrained credit card profitability. As a result, credit card issuers have had to modify conventional credit card business models to suit the operating environment.
In Ukraine, Visa and Mastercard dominate the credit cards market and the collective payment
cards market in terms of both number of cards and billed volume. Mastercard is also the leading network for debit cards in Ukraine in terms of both number of cards in issue and billed volume.
Key Retail Banks and Issuers
Three major issuers dominate the Ukraine credit and debit cards market: PrivatBank, Oschadbank and Raiffeisen Bank Aval. These issuers had a combined market share of 73% and 77% in the debit and credit cards issuance market respectively.
Acquiring and Processing
In 2015, 81% of merchant accounts and 84% of billed volume were controlled by five banks: PrivatBank, Oschadbank, Raiffeisen Bank Aval, Ukreximbank and Ukrsotsbank (UniCredit Bank). The majority of Ukrainian card processing is still conducted in-house, although the market is gradually moving towards outsourcing of both acquiring processing and issuing processing.
Ukrainian e-commerce sales volume reached an estimated $3.0 billion in 2015, an increase
of around 20% compared to the previous year. The online sales represented around 2% of the total retail sales in the country during the same year.
Regulatory and Markets Information
NBU and issuers have been taking various initiatives to reduce cash usage levels in the country. One such initiative made by NBU was lowering the per-day cash settlement limit for
individuals – which includes transactions with the banks, and purchase of goods and services -
from $6,177 to $2,059 (effective from July 2015).
Verisk financial reports include detailed market and competitor intelligence on payments cards, e-money, acquiring, retail banking, and consumer credit in Europe. Analysts use primary and secondary source data and conduct in-depth interviews with senior industry executives and finance experts.
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