Uzbek Banks See 1.8 Trillion UZS Rise in Non-Performing Loans Amid Credit Growth
Uzbekistan’s banking sector credit portfolio expanded significantly in Q1 2026, but troubled loans increased mostly in state banks.
In the first quarter of 2026, Uzbekistan's banking system experienced notable growth in its overall credit portfolio, reaching over 623.3 trillion Uzbek soums (UZS). However, this expansion was accompanied by a rise in non-performing loans (NPLs), which increased by 1.8 trillion UZS to nearly 19.9 trillion UZS, according to data released by the Central Bank of Uzbekistan.
State Banks Drive Credit and Troubled Loan Growth
The increase in problematic loans was primarily attributed to state-owned banks, whose loan portfolios grew by 11.1 trillion UZS during the same period. Key contributors to this growth included Agrobank, which saw an increase of 5.44 trillion UZS; Milliybank with 2.63 trillion UZS; Xalq Bank gaining 1.95 trillion UZS; and Aloqabank adding 1.89 trillion UZS.
While some banks expanded their loan books, others experienced contraction. For example, SQB and Asakabank reported reductions in their credit portfolios.
Private Banks Show Mixed Lending Performance
Among non-state banks, several institutions demonstrated active loan portfolio expansion. Hamkorbank, Hayot Bank, and Kapitalbank all recorded significant growth in lending activities. Conversely, TBC Bank and Orient Finans Bank reported declines in loan issuance.
Despite the overall growth in lending, the increase in non-performing loans was mainly concentrated within state banks, which saw a 1.46 trillion UZS rise in troubled loans. This surge was most pronounced in SQB, Aloqabank, and Asakabank.
On the other hand, some banks managed to reduce their NPLs. Ipoteka Bank successfully curtailed its troubled loans by 316 billion UZS. However, Anor Bank and Garant Bank experienced increases in their non-performing loan volumes.
"Although non-performing loans increased in absolute terms, their share relative to the total credit portfolio declined from 3.19% to 2.99% due to rapid portfolio growth," explained the Central Bank data commentary.
This dynamic suggests that while the banking sector is expanding credit availability, managing credit quality remains a critical challenge, particularly for state banks. The relative decline in the NPL ratio indicates some improvement in overall portfolio health, but rising absolute levels of problem loans warrant close attention from bank executives and regulators alike.
Strategic decisions in credit risk management and portfolio diversification will be vital for Uzbekistan’s banks moving forward. The divergent performance between state and non-state banks highlights the need for tailored approaches in governance and operational focus to ensure sustainable growth and financial stability.
