Tashkent, Uzbekistan (UzDaily.com) — The Institute of Macroeconomic and Regional Studies under the Cabinet of Ministers of Uzbekistan (IMRS) has assessed competition in Uzbekistan’s banking sector using the Herfindahl-Hirschman Index (HHI).

Markets are categorized into three groups based on the competition level indicated by the HHI: if HHI is between 2,500 and 10,000, competition is low; between 1,500 and 2,500, moderate; and below 1,500, high. Since April 2019, deposit, asset, and loan markets have demonstrated high competition, with HHI values consistently under 1,500.

Assets

As of 1 October 2024, the HHI for commercial bank assets was 839 points (compared to 907 points in the same period of 2023), improving by 23 points from the previous quarter. In Q3 2024, total assets reached 738.7 trillion soums, a 48.3 trillion soum increase from Q2 and 123 trillion soums more year-on-year. The share of assets held by banks with private and foreign capital rose by 2% compared to Q3 last year, reaching 33%. At the same time, the share of two major state-owned banks, UzNatsbank and UzPromStroybank, decreased by 1.8%. The Kazakh “Eurasian Bank” branch began operations as a private bank, holding a 0.03% share of total assets as of October 1.

During this period, Poytakhtbank was acquired by UAE-based Bond Investments Limited LLC, further increasing the share of private and foreign-capital banks in the total banking system assets by 0.04%.

Loans

Competition in the loan market also improved, with the HHI at 943 points as of 1 October (compared to 986 in 2023). The total loans issued by commercial banks increased by 14.2% from the same period last year, reaching 515.6 trillion soums. Loans to individuals and businesses grew by 22% and 11%, respectively. By industry, loans in manufacturing rose by 14%, in agriculture by 12%, and in trade and services by 10%. The credit portfolio share of the three largest state-owned banks (UzNatsbank, Agrobank, and UzPromStroybank) decreased by 0.5% compared to Q2 2024.

As of 1 October, the average interest rate on loans to individuals in national currency was 23.8% (compared to 24.4% in 2023), and for businesses, 22.7%.

Deposits 

The HHI for deposits in Q3 2024 improved by 36 points from Q2, reaching 657 points (670 in the same period in 2023), indicating higher competition in the deposit market compared to assets and loans. Competition among banks with private and foreign capital intensified: the share of Ipak Yuli Bank in total deposits grew by 0.8%, Anor Bank and Ipoteka Bank by 0.7%, and Hamkor Bank and TBC Bank by 0.3%. Meanwhile, the share of the three largest state-owned banks in total deposits decreased by 0.9%.

As of 1 October, the average annual interest rates on fixed deposits in national currency for individuals and businesses were 22% and 16.2%, respectively.