Uzbek Banks See 1.8 Trillion UZS Rise in Non-Performing Loans Amid Credit Growth

In the first quarter of 2026, Uzbekistan's banking system experienced substantial growth in its credit portfolio, reaching over 623.3 trillion Uzbek soms, according to data released by the country's Central Bank. However, alongside this expansion, the volume of non-performing loans (NPLs) also increased by 1.8 trillion soms, totaling nearly 19.9 trillion soms.

Growth Concentrated in State-Owned Banks

The increase in non-performing loans was mainly driven by state-owned banks, which saw their credit portfolios grow by 11.1 trillion soms during the quarter. Notable contributors to this rise included Agrobank (+5.44 trillion soms), Milliybank (+2.63 trillion soms), Xalq Bank (+1.95 trillion soms), and Aloqabank (+1.89 trillion soms).

Conversely, some banks such as SQB and Asakabank experienced a contraction in their credit portfolios, reflecting a varied performance across the sector.

Private Banks and Market Dynamics

Among non-state banks, Hamkorbank, Hayot Bank, and Kapitalbank demonstrated active credit growth. However, TBC Bank and Orient Finans Bank reduced their loan issuance during the same period.

Non-Performing Loans Distribution and Trends

"Despite the rise in non-performing loans, the overall share of NPLs decreased from 3.19% to 2.99%, thanks to rapid credit portfolio growth," the Central Bank's data indicated.

The surge in non-performing loans was chiefly seen in state banks, rising by 1.46 trillion soms. The largest rises in problem loans were recorded at SQB, Aloqabank, and Asakabank. Nevertheless, some banks such as Ipoteka Bank managed to reduce their NPLs by 316 billion soms, while Anor Bank and Garant Bank saw increases.

Implications for Digital Finance and the Financial Sector

The notable expansion in credit portfolios, particularly within state banks, coupled with an increase in non-performing loans, signals both growth opportunities and rising risks within Uzbekistan's banking sector. For fintech companies, digital banking platforms, and payment service providers, these developments underscore the importance of advanced credit risk assessment tools and cybersecurity measures to mitigate potential loan defaults and financial instability.

Moreover, the mixed performance among private banks highlights a dynamic credit market that could benefit from enhanced data analytics and blockchain-based transparency solutions to support healthier lending practices and investment decisions.