KIEV, March 5 - Ukraine's banking sector experienced further asset quality deterioration during the second half of 2009, and the sector will require substantial further capital support going forward, Fitch Ratings said in a special commentary.

"Approximately half of all loans, on average, are now reported by Fitch-rated banks as non-performing or restructured," reads the commentary. "The level of impairment continues to drive large losses for the sector, while the current focus on crisis management, coupled with banks' risk aversion and funding constraints, severely limits the potential for significant new lending in the near-term."