The Center for Economic Research and Reforms (CERR) has calculated the Banking Activity Index for the first half of 2023 in Uzbekistan, resulting in an updated ranking of banks.
The index covers 29 commercial banks grouped into large (17) and small (12) categories.
Based on the grouping of 27 types of coefficients, comparisons, and rankings, the index is determined.
Conducted quarterly, the research monitors changes in the private sector's share of banking assets and evaluates the effectiveness of reforms and transformation processes in the country's banking sector.
Bank Performance Indicators
According to UzDaily, despite growth in key banking system indicators compared to 2022, the pace of total deposit growth has slowed. As of June 1, 2023, the republic's banking system assets totaled 572 trillion sum($47bn), a 16% increase from the previous year; liabilities grew by 16% to 487 trillion sum. The outstanding loan balance exceeded UZS 420tn ($34bn), up 22%, while deposits grew by 18% to reach UZS 205 tn($16bn).
Eleven state-owned banks accounted for 77% of assets, 81% of the credit portfolio, and 60% of deposits in the banking system, with the remaining share belonging to 23 private banks. The loan-to-deposit ratio in state-owned banks was 275%, compared to 99% in other banks.
Financial stability indicators of the banking system exceeded Basel III minimum requirements. The primary goal of Basel III is to enhance stability during financial and economic crises in member countries' banking systems, improve risk management and assessment, and increase transparency and disclosure standards.
Specifically, the capital adequacy ratios and Tier 1 capital ratios of 16.8% and 14.2%, respectively, were 1.5 times higher than the minimum requirements.
Highly liquid assets of the banking system amounted to UZS 82tn ($6bn), down 9.8% compared to the corresponding period of the previous year. Their share in the total asset volume decreased from 19.1% to 14.4% over the year.
Bank profitability increased in the first half of the year. Interest income rose by 34.3%, non-interest income increased by 23.2%, and net profit grew by 40.5%.
Population engagement with the banking system significantly increased. While 22.5% of the credit portfolio belonged to individuals in the first half of the previous year, their share grew by 6% points to 28.6% over the year. The proportion of legal entities decreased from 77.5% to 71.4%.
Deposits from individuals increased by 8%, reaching 33.5%, while deposits from legal entities decreased from 74.5% to 66.5%.
Non-performing loans decreased, with the share of problem loans (loans with a deferment period of more than 90 days, non-performing loans - NPL) in the total loan portfolio standing at 3.5%, down 1.8 percentage points compared to the corresponding period of the previous year.
Analysis of Bank Activity Reports
The study examined citizens' inquiries received by the People's Reception Office during the first half of 2023, with about 26,000 related to banking sector activities. Of these, around 8,000 expressed dissatisfaction with banking activities, with Halq Bank (26%), Agrobank (16%), and Microcredit Bank (6%) receiving the highest number of complaints.
Despite some loss in capital adequacy positions, Kapital Bank maintained its position as a leader among large banks, increasing its liquidity rating by 4 points.
Hamkorbank secured second place overall. This bank moved up one spot, switching places with Asia Alliance Bank.
Among the 17 large banks, four improved their positions by 1 point - Invest Finance Bank, Khalq Bank, Qishlok Qurilish Bank, and Turon Bank, while the next four lost their positions in the ranking - Aloqa Bank, Microcreditbank, National Bank, and Asaka Bank. The remaining banks maintained their positions.
Kishlok Qurilish Bank improved its liquidity rating by 3 points. Trust Bank, despite retaining its position in the overall ranking, climbed 4 points in terms of asset quality.
Halk Bank showed no positive changes in any indicator in the overall ranking, holding onto 10th place. Turon Bank improved across all categories, rising to 16th place in the overall ranking, leaving Asaka Bank in last place.
Microcredit Bank's 1-point drop in the overall ranking is explained by the bank losing 4 positions in terms of management efficiency, asset quality, and financial intermediation.
Among the large state-owned banks, Halk Bank, Qishlok Qurilish Bank, Uzpromstroybank, and Asaka Bank also lost their positions in terms of management efficiency.
Two banks, Agrobank and Asaka Bank, lost 1 point each in terms of financial intermediation.
In terms of profitability, Kishlok Qurilish Bank, National Bank, Hypothek Bank, and Ipak Yuli Bank each lost 1 point.
Ranking of Small Banks
In the small banks ranking, Davr Bank and Universal Bank maintained their leading positions. TBC Bank continues to rise, closing out the top three among small banks. In this quarter, TBC Bank switched places with Ziraat Bank. While TBC Bank's asset quality indicators declined, improvements in capital return and potential profitability led to its rise in the overall ranking.
Poytaxt Bank and UzKDB Bank also climbed 1 point in the ranking, while Madad Invest Bank and Ravnaq Bank each lost 1 point.
The share of non-performing loans in the banking system for July 1, 2023
KAP DEPO Investment company recently shared on their LinkedIn page that by July 1, 2023, the non-performing loans (NPLs) in the banking system amounted to 3.4%, totaling UZS 14.3 tn($1bn). This reflected a 1.5% reduction compared to the previous year.
Consequently, the percentage of overdue loans in corporate loans underwent a reduction of 1.3% points, reaching 3.5%, while in retail loans, it experienced a decline of 2.1% points, reaching 3.1%. In terms of currency, 67% of NPLs were composed of local currency loans, and the remaining 33% were denominated in foreign currencies. When analyzed by customer, 27% pertained to retail loans, and the remaining 73% were corporate loans.
Within the loans extended to individuals, the proportion of delinquent debt was 3.1%. This encompassed 1.6% for mortgage loans, 1.6% for micro-loans, and 0.5% for car loans.
The net NPL to capital ratio registered a decrease of 5.7 percentage points when compared to the corresponding period in the previous year, totaling 8.6%.
Comments (0)