S&P warns of heightened risks for Uzbekistan’s banking sector

Uzbekistan’s banks may face significant challenges over the next two years, including declining financial affordability and low household incomes, according to the international rating agency Standard & Poor’s.

S&P’s report, “Banking Outlook for Central Asia and the Caucasus in 2025,” emphasizes that the growing share of consumer and microloans in Uzbekistan signals an increase in high-risk segments within bank loan portfolios.

According to the report, banks continue to expand unsecured consumer lending and increase financing for small and medium-sized businesses in an effort to boost operational profitability.

Additionally, it is mentioned that aggressive credit expansion, growing competition — including the active entry of foreign players — and an underdeveloped risk management culture will pose serious challenges to the quality of rapidly growing bank assets.

Data shows that regulatory measures implemented since 2023 have helped slow down the rapid growth of retail lending, reducing its growth rate to 20% in 2024 — a significant drop from previous years, when it had reached approximately 50%.

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