The Center for Economic Research and Reforms has updated the “Bank Activity Index” for the 3Q 2024, which covers 31 commercial banks in the country, calculated taking into account the classification of banks into 17 large and 14 small, depending on their volume of activity.
The index is based on 27 coefficients, which allows for in-depth analysis and comparison with the national averages, as well as in accordance with the requirements of the Basel Committee. This rating serves as an important tool for assessing the stability of the banking sector in Uzbekistan, contributing to the further development of the country's financial system.
The main purpose of this study is to monitor the dynamics of the share of the private sector in banking assets, to assess the effectiveness of ongoing reforms and transformation processes in the banking sector.
In the 3Q 2024, stability is observed among the largest banks in Uzbekistan, which indicates the growing stability of this sector. Maintaining positions in the top six of the rating and improving the performance of some banks, such as Mikrokreditbank and Uzsanoatqurilish bank, indicates positive changes in their financial attractiveness and liquidity. Nevertheless, a number of large banks have faced challenges and the need to adapt management strategies.
Four of the 17 leading credit institutions failed to maintain their positions, while three banks improved their performance. At the same time, 10 market participants retained their positions unchanged, which indicates increased competition in the sector. If earlier banks demonstrated a more active movement in the rating, now there is a stabilization of the balance of power, reflecting the increasing stability of the players.
The top 6 largest banks retained their positions in the ranking. Kapitalbank, Trast Bank, Asaka bank, Hamkor Bank, Ipak Yuli Bank and Orient Finance Bank.
Mikrokreditbank showed the best result in this quarter, improving its position by two points at once and taking 11th place in the rating.
Uzsanoatqurilish bank also showed an improvement in its overall rating, rising by one position, which is associated with an increase in financial attractiveness and asset quality. In addition, this bank has increased its liquidity, which has allowed it to rise three positions in this category, which indicates the stability of the bank.
The analysis showed that one of the largest state-owned banks in the country, Xalq Bank, has risen by one position in the overall rating, which is due to an increase in its financial attractiveness and liquidity.
At the same time, the National Bank lost its position in the overall rating, dropping one line down, which is due to the loss of key indicators for management efficiency – minus two points, and liquidity, a decrease of one point, respectively.
In addition, BRB lost four points in terms of financial intermediation, which led to a decrease in the overall rating by one position.
Agrobank, another of the state-owned banks, which lost one point in the overall rating, as a result of the deterioration of three key indicators at once: financial attractiveness, capital adequacy and liquidity. The bank lost one position in each of the categories.
In addition, according to the indicator of financial intermediation, which includes the ratio of deposits to loans and obligations to other banks and the state, Mikrokreditbank lost two positions, and BRB lost four positions.
Orient Finance Bank demonstrates weak results in terms of financial accessibility, remaining on the last line of the rating (17th place) according to this indicator, which may indicate a lack of customers or a low volume of lending, negatively affecting the competitiveness of the bank.
In terms of asset quality (ROA, NPL indicators), Ipoteka bank lost 1 position and took the last place on this indicator. According to the same indicator, Trast bank dropped by 4 positions at once, and Kapitalbank, Hamkor bank, Mikrokreditbank and Turon bank — by 1 position each, which in general may indicate difficulties in attracting customers and issuing loans.
In terms of profitability, Asaka Bank was placed in the last place, while Asia Alliance Bank rose 1 position up.
Turon Bank took the last place in terms of management efficiency. Also, according to this indicator, among large banks, Ipoteka Bank, National Bank and Asia Alliance Bank fell by 3 positions, and Uzsanoatqurilishbank — by 1 position down, which may indicate high operating costs or low employee productivity.
In terms of liquidity, Agrobank lost 1 position and dropped to last place. According to the same indicator, Asaka Bank lost 4 positions, taking the 16th line. Orient Finance Bank also dropped 7 positions in this indicator, and 5 more commercial banks lost 1 position each. These changes may signal the need to improve liquid positions in order to increase financial stability, to ensure stability and trust from customers and investors.
In the 3Q 2024, the following dynamics is observed in the rating of small banks: four financial institutions were able to improve their positions. The best result was demonstrated by Yangi Bank, which rose by 5 points and took 8th place in the overall rating.
Additionally, four commercial banks increased their positions by one point, which indicates positive changes in their activities. It is important to note that 5 of the 14 banks, including Universal Bank, TBC Bank, Ziraat Bank, Poytakht Bank and Tenge Bank retained their positions, which indicates their stability.
However, four financial institutions have worsened their results, which may be due to various factors, including changes in market conditions and internal operational problems.
If AVO Bank showed the most noticeable growth in the 2Q - plus three points, then in the third quarter this bank lost four values in the overall rating of small banks.
According to the results of the analysis, in the 3Q 2024, the banking sector of Uzbekistan demonstrates significant stability and stability among both large and small banks. The largest financial institutions maintain their positions in the rating, which indicates the maturity of the market and the ability to adapt to changes in the external environment. The improvement in the performance of individual banks highlights the positive trends in financial attractiveness and liquidity.
There is an active movement in the segment of small banks. At the same time, the need for constant monitoring and adaptation of management strategies remains relevant, which will allow all market participants to strengthen their positions and increase overall financial stability.
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