• USD12825.01
    • RUB128.62
    • EUR13552.19
    Finance

    Uzbekistan's banking sector: $1.4 bn challenge with 3.8% non-performing loans

    Uzbekistan's banking sector: $1.4 bn challenge with 3.8% non-performing loans

    In a January 16 meeting, President Mirziyoev particularly underscored the potential recovery of Non-Performing Loans (NPLs), noting the availability of substantial resources amounting to UZS 25 trillion (approximately $2.03 bn).

    The Central Bank of Uzbekistan reported that, as of December 1, 2023, Uzbekistan's banking sector (both state owned and private) faces the challenge of non-performing loans (NPL), with a total of UZS 17.6 trillion (approximately $1.4 bn) constituting 3.8% of the overall loan portfolio of UZS 465.5 trillion (approximately $37.6 bn). 

    During the meeting, it was noted that Jizzakh, Surkhandarya, and Syrdarya regions have seen an increase in the share of NPL, reaching 10%. The Central Bank of Uzbekistan, however, does not provide a regional and product-wise breakdown of these NPLs, regional economist, Otabek Bakirov reported on his social media.

    Commercial banks, particularly those under state control, tend to downplay the extent of NLPs to present a more favorable financial performance by year-end. Strategies employed include refinancing NPLs extending their terms, and resolving issues with other banks through mutual loan exchanges. This practice, however, may mask the true nature of NPL, as many of them remain unrecovered. Treating them as a resource may lead to misguided decisions.
    Photo: Information on problem loans from commercial banks
    as of December 1, 2023
    Source: CBU/Daryo

    Total NPL Landscape

    The CBU, in its official release, reveals that NPL stands at UZS 17.6 trillion (approximately $1.4 bn), emphasizing the imperative of addressing these NPLs. The magnitude of NPL is a critical factor, amounting to 3.8% of the entire loan portfolio. 

    State-Owned Banks: A Closer Look

    National Bank of Uzbekistan

    National Bank of Uzbekistan grapples with NPL, holding a substantial loan portfolio of UZS 96.7 trillion (approximately $7.8 bn). The non-performing loans reach UZS 3.4 trillion (approximately $277 bn), translating to an NPL share of 3.5%.

    Asaka Bank

    Asaka Bank manages a loan portfolio of UZS 40.1 trillion (approximately $3.2 bn), with NPL amounting to UZS 1.8 trillion (approximately $147 mn). The NPL share, standing at 4.5%, poses challenges for the bank's financial stability.

    Business Development Bank

    The Business Development Bank confronts the hurdle of NPL in its loan portfolio of UZS 22.1 trillion (approximately $1.8bn). Non-performing loans total UZS 1.9 trillion (approximately $152 mn), accounting for a substantial 8.5% share.

    Private Banks in the Spotlight

    Ipotekabank

    Among private banks, Ipotekabank stands out with a significant loan portfolio of  approximately UZS 37 trillion (around $3 bn). While their NPL is at around UZS 2 trillion (approximately $156 mn), accounting for a substantial 5.2% share.

    Kapitalbank

    Kapitalbank, another private entity, manages a loan portfolio of UZS 25.3 trillion ($2.05 bn). While the NPL at UZS 444 bn (around $36 mn) and, the bank's NPL share is 1.8%.

    HamkorBank

    HamkorBank navigates the challenge of around with a loan portfolio of UZS 16 trillion (approximately $1.3 bn. The specific NPL is UZS 104 bn ($8.4 mn), while NPL share is 0.7%.

    Follow Daryo's official Instagram and Twitter pages to keep current on world news.

     

    Khadicha Abdurashidova

    On this topic

    Leave A Reply

    ×Lightbox Image

    Daryo.uz | Solution to your problems


    Ipoteka bank Joins AmCham Uzbekistan!