Assessment of the Credit Market of Banking Institutions: New Tools for Risk Identification and Management

Abstract

In today's world, where geopolitical instability and conflicts are becoming an integral part of reality, the functioning of the national banking system is accompanied by constant challenges that lead to an increase in credit risks. The authors examine the impact of the military conflict on the factors of growth of banks' credit risk, its assessment and management tools in accounting according to international standards. Changes to a number of regulatory acts of the National Bank of Ukraine on issues that determine prudential approaches to credit risk assessment are investigated. The article emphasizes the need to comply with the following principles in assessing credit risk: the benefits of the essence of the bank's active operations over their form; timeliness and completeness of credit risk identification; adequacy of credit risk assessment; application by the bank of methods of credit risk reduction that objectively ensure its minimization; consideration of the bank's own experience in assessing credit risk; sufficiency and adequacy of internal regulations developed by the bank, the application of which ensures proper credit risk assessment. The article analyzes the state of credit risk management by Ukrainian banking institutions, including the situation with non-performing loans in PrivatBank, Sens Bank, Ukreximbank, OTP Bank, Bank Credit Dnipro, Piraeus Bank , taking into account the peculiarities of martial law. The study proves that credit risk continues to be the main source of problems in Ukrainian banks, which should be clearly aware of the need for credit risk management. The process of credit risk management should include identification, measurement, evaluation, monitoring and control of risks. This means identifying possible risk factors, assessing their possible consequences, and monitoring activities exposed to the identified risks.