Tashkent, Uzbekistan (UzDaily.com) -- The Center for Economic Research and Reforms (CERR) calculated the Bank Activity Index for the 1st half of 2023, on the basis of which the rating of banks was updated. The index is calculated for 29 commercial banks grouped into two groups: large (17) and small (12) banks.

The index is determined based on the grouping of 27 types of coefficients, comparison and ranking.

The study is conducted quarterly in order to monitor changes in the share of the private sector in banking assets, as well as to assess the effectiveness of reforms and transformation processes in the country’s banking sector.

Key performance indicators of banks

Despite the growth of key indicators of the banking system compared to 2022, the growth rate of total deposits decreased. In particular, the assets of the banking system of the republic as of June 1, 2023 amounted to 572 trillion sums, which is 16% more than a year earlier, liabilities increased by 16% to 487 trillion. soums, the balance on loans exceeded 420 trillion sums with an increase of 22%, deposits increased by 18% and reached 205 trillion sums.

77% of assets, 81% of the loan portfolio, as well as 60% of deposits of the banking system were accounted for by 11 banks with a state share, and the rest - by 23 private banks. In addition, the ratio of loans to deposits in state-owned banks was 275%, while in other banks this figure was 99%.

Indicators of financial stability of the banking system exceeded the minimum requirements of Basel III.

The basic requirements of Basel III are aimed at improving the stability of the banking systems of the countries that are members of the Committee in relation to financial and economic crises, improving the quality of risk management and assessment, increasing transparency and disclosure standards.

In particular, the adequacy ratios of regulatory capital, as well as first–class capital 16.8% and 14.2%, respectively, were 1.5 times higher than the minimum requirements.

Highly liquid assets of the banking system amounted to 82 trillion sums, having decreased by 9.8% compared to the corresponding period last year, and their share in the total volume of assets for the year decreased from 19.1% to 14.4%.

In the 1st half of the year, an increase in the level of profitability of banks was noted. Interest income increased by 34.3%, interest-free income increased by 23.2%, net profit by 40.5%.

The activity of the population in the use of the banking system has significantly increased. If in the 1st half of last year 22.5% of the loan portfolio belonged to individuals, then over the year their share increased by 6 percentage points and amounted to 28.6%, and the number of legal entities respectively decreased from 77.5% to 71.4%.

At the same time, the balance of deposits of individuals increased by 8% and amounted to 33.5%, legal entities decreased from 74.5% to 66.5%.

The balance of non-performing loans has decreased. The share of problem loans (loans deferred for more than 90 days, non–performing loans - NPL) in the total volume of loans amounted to 3.5%, decreasing by 1.8 percentage points compared to the corresponding period of the previous year.

Analysis of appeals about the activities of banks

In the course of the study, the appeals of citizens received by the People’s Reception during the 1st half of 2023 were studied. In particular, 26 thousand appeals were received regarding the activities of the banking sector. Of these, about 8 thousand appeals expressed dissatisfaction with the activities of banks, in particular, the largest number fell on Khalq Bank – 26%, Agrobank – 16% and Mikrokreditbank - 6%.

Despite some loss of capital adequacy positions, Kapital Bank has firmly established itself as a leader among large banks, raising its liquidity rating by 4 points at once.

Hamkorbank took the second place in the overall rating. This bank, having risen by one point, swapped places with Asia Alliance Bank.

Among 17 large banks, four more banks improved their positions on 1 point — Invest Finance Bank, Khalq Bank, Qishlok Qurilish Bank and Turon Bank, while the next four banks lost their places in the rating — these are Aloqa Bank, Mikrokreditbank, National Bank and Asaka Bank. The other banks retained their positions.

Qishlok Qurilish Bank improved its place in the rating in terms of liquidity by 3 points. Despite the fact that Trast Bank has not changed its position in the overall rating, this bank has risen by 4 points in terms of asset quality.

Khalq Bank did not show positive changes in any indicator in the overall rating, retaining the 10th place. Turon Bank improved its performance in all positions and rose to the 16th place in the overall rating, leaving Asaka Bank in last place.

The decrease in the positions of Mikrokreditbank by 1 point down in the overall rating is explained by the fact that the bank lost 4 positions in terms of management efficiency, asset quality and financial intermediation.

In terms of management efficiency among large state-owned banks, Khalq Bank, Qishlok Qurilish Bank, Uzpromstroybank and Asaka Bank also lost their positions.

According to the indicator of financial intermediation, two more banks worsened their positions — Agrobank and Asaka Bank lost 1 point each.

In terms of profitability — Qishlok Qurilish Bank, National Bank, Ipoteka Bank and Ipak Yuli Bank lost 1 point each.

Small banks activity rating for the 1st half of 2023

In the rating of small banks, Davr Bank and Universal Bank retained their leading positions. TBC Bank continues to climb, closing the top three among small banks. In this quarter, the bank swapped places with Ziraat Bank. Although TBC Bank’s asset quality indicators have decreased, the improvement in capital return indicators, as well as potential profitability, has led to an increase in its place in the overall rating.

Also, Poytaxt Bank and UzKDB Bank rose in the rating by 1 point, while Madad Invest Bank and Ravnaq Bank lost 1 point each.