This is the inaugural Financial Stability Report published by the Central Bank of Uzbekistan.
This report summarizes macro-financial conditions, an analysis of the banking system’s stability, some macroprudential policy instruments, and the preliminary results of the macro stress test.
The report also assesses the key external and internal risks to financial stability. Uzbekistan’s banking system has been resilient to shocks stemming from the deterioration of the external geopolitical situation, high global inflation, and increased domestic debt burden level and non-performing loans (NPLs). In H1 2022, financial soundness indicators of the banking sector were above the minimum regulatory requirements.
Over the last 3-4 years, the total credit-to-GDP ratio in Uzbekistan increased significantly.
Due to the pandemic, the NPL ratio peaked at 5-6 percent in 2020–2021. However, following stronger economic activity and business and household solvency improvement, the NPL ratio decreased to 4.7 percent as of October 1, 2022. NPLs in the industrial and agricultural sectors grew considerably.
In 2018–2021, the share of mortgage loans with a payment-to-income (PTI) ratio higher than 51 percent accounted for 60-70 percent of all mortgage loans.
According to the macro stress test, banks’ capital adequacy will stay above the regulatory minimum in the short and medium term under the baseline and moderately adverse scenarios. Banks will be able to withstand various shocks well. However, in the severely adverse scenario, i.e., in case of a sharp economic deterioration and a significant exchange rate depreciation, the banking system’s regulatory capital will fall below the minimum requirement.
The report also analyses concentration in the banking sector and assesses the need for implementing an additional capital buffer for systemically important banks.
