In December of 2023, Uzbekistan saw a significant decrease in the volume of car loans, dropping to UZS 1.8 trillion (nearly $146mn). This figure represents a decline of over 50% compared to the period before the Central Bank introduced new restrictions.
The year 2023 marked a period of considerable change for the car loan industry. The highest volume of car loans was recorded in May, with contracts amounting to UZS 4.45 trillion ($360.8mn). In the same month, the Central Bank proposed a new approach to assessing the risks associated with car loans. The initiative was driven by concerns that the growing concentration of car loans in banking portfolios could lead to increased risk. The new regulations were implemented on August 20.
Loan Distribution
In 2022, financial institutions granted a total of UZS 65.3 trillion ($5.3bn) in loans to individuals. Nearly a third of this amount, UZS 19.6 trillion ($1.6bn), was allocated to car loans. This is a significant increase compared to 2021, when only a fifth of retail loans, amounting to UZS 8.5 trillion ($689.2mn), were directed towards the car market. As of April 1, 2023, the total portfolio of car loans held by banks stood at UZS 26.4 trillion ($2.1bn), a 50% increase from the previous year.
September brought further changes, with financial institutions now required to limit auto loans to 25% of their total loan portfolio.
Following the implementation of the new regulations in August, there was a marked decrease in the volume of car loans. In the final month of summer, loans worth UZS 4.4 trillion ($356.7mn) were issued. However, by September, this figure had dropped to UZS 3.27 trillion, and by October, it had fallen further to UZS 2.2 trillion. November saw a slight increase to UZS 2.28 trillion, but by December, the volume had decreased again to UZS 1.8 trillion.
According to the Central Bank, car lending leads the way among other types of loans to the population. Over six months, banks lent UZS 18.5 trillion ($1.5bn) to citizens for this purpose, accounting for more than 40% of the total volume of lending to individuals (UZS 46.1 trillion or $3.7bn). Micro-loans took second place with UZS 12.9 trillion ($1.04bn), followed by mortgages at UZS 7 trillion ($567.5mn).
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