Moody’s Rating Agency indicates a stable outlook for Uzbekistan’s banking sector in 2024, with problem loans increasing to 7%. Continued state support for large banks is expected to maintain financial stability. The loan-to-deposit ratio stands at 173%, and national reserves provide additional support against economic uncertainties. Despite challenges, real GDP growth is projected at 5.7% in 2025-2026.
In 2024, Moody’s Rating Agency reported a stable outlook for Uzbekistan’s banking sector, despite the rise in problem loans to 7%. The government is anticipated to continue supporting large banks, which is vital for maintaining financial stability amid these challenges.
The increase in problem loans results from state-owned banks identifying their problematic assets. This trend is projected to stabilize between 6% and 7% over the next 12 to 18 months. Furthermore, the capital-to-risk-weighted assets ratio, excluding state capital, is expected to remain around 14% to 15% compared to 14.3% at the end of 2023.
By the conclusion of 2024, the loan-to-deposit ratio is estimated to be 173% across the banking sector, with state-owned banks at 237%, while private banks are at 108%. Market financing mainly comprises long-term liabilities, which helps mitigate refinancing risks, although exposure to foreign currency liabilities remains a concern due to potential exchange rate fluctuations.
Moody’s noted a high likelihood of state support for major banks despite ongoing privatization plans. The government maintains control over significant financial institutions such as Agrobank and Mikrokreditbank, integral to the implementation of economic policies.
Since 2018, approximately $1.8 billion in capital has been infused into state-owned banks. By the end of 2024, total assets within Uzbekistan’s banking sector are projected to reach $59.5 billion, which is equivalent to 53% of the nation’s GDP.
The five largest banks dominate the market, controlling 54% of it, while state-owned banks account for 65% of total assets. The credit ratings of 13 commercial banks, representing 62% of sector assets, vary from b1 to baa1, averaging a weighted rating of b2.
Supported by national reserves equal to 37% of GDP, Uzbekistan’s banking system is robust. Total loans in the sector also represent 37% of GDP, highlighting the government’s potential to safeguard economic and financial stability.
Despite geopolitical tensions, such as the Russia-Ukraine conflict, Uzbekistan’s economy demonstrates resilience. As stated by Bankers.uz, citing Moody’s data, real GDP growth is expected to remain at 5.7% in 2025-2026, which could enhance borrower solvency and the overall health of the financial sector.
In summary, while problem loans in Uzbekistan’s banking sector have increased to 7%, strong state support and continued economic growth present a stable outlook for the financial system. The government’s control over key banks plays a significant role in economic policy implementation, and national reserves bolster resilience against external challenges. Overall, projections for GDP growth indicate a positive trend for the financial health of borrowers.
Original Source: daryo.uz
