Uzbekistan's commercial banks are grappling with a surge in non-performing loans (NPLs), as reported by the Central Bank of Uzbekista on February 27. Data reveals a sharp rise, with NPLs hitting UZS 20 trillion ($1.6 bn) by February 1, 2024, marking a significant jump from January figures, UZS 3.4 trillion ($272 mn). This surge, now comprising 4.3% of the total loan portfolio, poses challenges to the country's banking sector.
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State-owned banks bear the brunt of this surge, accounting for UZS 15.4 trillion ($1.2 bn) of NPLs, marking a UZS 2.2 trillion ($176 mn) increase from the previous month. Commercial banks also witnessed a significant uptick in NPLs, with NPLs rising to UZS 4.59 trillion ($368 mn).
Among state-owned banks, the Business Development Bank stands out with an alarming 11% share of NPLs, followed closely by Xalq Banki with 7.6%. On the other hand, private financial institutions also face challenges, with notable concerns surrounding NPL ratios. Octobank and Madad Investment Bank report particularly high percentages of problem loans, at 75% and 28%, respectively.
Comparing NPL data between February 1, 2024, and February 1, 2023, reveals significant shifts in the landscape of non-performing loans (NPLs) among commercial banks in Uzbekistan.
In 2024, the total loan portfolio has notably increased to UZS 470 trillion ($36 bn), reflecting a rise from the previous year's UZS 391 trillion ($31 bn). This surge in loan portfolio size indicates a heightened level of lending activity within the banking sector over the past year.
Correspondingly, the volume of non-performing loans has seen a considerable escalation, reaching UZS 20 trillion ($1.6 bn) in 2024, up from UZS 15 trillion ($1.2 bn) in 2023. Examining the share of NPLs in relation to total loans provides insights into the extent of asset quality deterioration within the banking sector. In 2024, NPLs accounted for 4.3% of the total loan portfolio, marking a notable increase from the 3.8% recorded in 2023.
As of January 1, 2024, Uzbekistan's banking industry confronts a considerable hurdle with a nearly 20% surge in non-performing loans (NPLs), amounting to approximately UZS 16.6 trillion (equivalent to $1.3 bn), as reported by the Central Bank of Uzbekistan. The impact is particularly pronounced on state-owned banks, which shoulder UZS 13.2 trillion ($1.06 bn) of the overall NPLs, while commercial banks hold UZS 3.3 trillion ($264 mn).
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