Why is this important
A decrease in the NPL (non-performing loans) share is an indicator of bank sector recovery and asset quality improvement. This can affect the credit rating of banks and access to financing.
What happened
- According to the Central Bank, the volume of problem loans decreased from 22.5 trillion to 21.8 trillion soums;
- The largest decrease was shown by the National Bank (NBU) — from 3.76 trillion to 3.1 trillion soums (-674 billion).
The NPL rate remains high for other state-owned banks:
- Agrobank — 2.6 trillion soums
- Uzbek Industrial and Construction Bank — 2,4 trillion
- Asakabank — approximately 1.9 trillion
- Ipotekabank’s significant improvement is from 3.6 trillion in January to 2.2 trillion by September 1.
What they say
Financiers note that a sharp decrease in NPL is possible due to both repayments and restructuring, as well as the active write-off of hopeless debts from the balance sheets of large banks.
Context
Problem loans are a vulnerable spot in the banking system, especially in state-owned banks with a history of aggressive lending. The Central Bank is tightening control over the quality of assets and requiring banks to more transparently account for bad debts. Previously, Ipotekabank reported on the write-off of part of the NPL and the attraction of external expertise for risk management.
