FORMATION OF AN EFFECTIVE MANAGEMENT SYSTEM AND INTERNAL BANKING CONTROL FOR CREDIT RISK USING THE EXAMPLE OF JSC "FUIB"

Abstract

The purpose of this paper is to develop approaches to building an effective credit risk management and internal bank control system using the case of the First Ukrainian International Bank (PUMB). The relevance of the study is driven by the increasing role of professional risk management in maintaining the stability of the Ukrainian banking sector under war-related and post-war shocks. The article summarizes the theoretical foundations of credit risk, systematizes modern methods of its assessment and mitigation, and emphasizes the anticipatory (preventive) concept of credit risk control, which allows banks to identify problem exposures at an early stage. A critical review of recent Ukrainian and international research, National Bank of Ukraine regulations, and Basel III principles on internal risk governance has been carried out. The paper examines PUMB’s risk management architecture, which is organized according to the “three lines of defense” model and includes credit analysis, independent risk management, compliance, and internal audit, thus ensuring segregation of duties and independence of control. A statistical analysis of PUMB’s financial statements for 2024 was performed to track the dynamics of the credit portfolio, the structure of assets, and capital adequacy. The results show that the bank maintains a moderate loans-to-assets ratio (around 35 - 40%), steadily increases customer funding, and keeps the equity-to-assets ratio above 11%, which indicates a controlled risk profile and sufficient loss-absorption capacity. Internal bank control is implemented through credit limits, scoring models, regular stress testing, and follow-up internal audit inspections reported to the supervisory board. Based on the findings, the study proposes several practical measures for Ukrainian banks: implementation of an Early Warning System for non-performing loan detection, enhancement of IFRS 9 - based provisioning policies, stricter collateral quality requirements, wider use of analytical IT tools for portfolio monitoring, and periodic revision of the bank’s risk appetite in line with macroeconomic volatility. These measures will help reduce credit losses, increase transparency of risk-taking, and ultimately strengthen the financial resilience and market trust in Ukrainian banks.