Tashkent, Uzbekistan (UzDaily.com) -- Experts from the Institute of Macroeconomic and Regional Studies analyzed the level of competition in the banking system of Uzbekistan for the 4th quarter of 2023.

Calculations were carried out using the concentration index HHI (Herfindahl-Hirschman index), widely used in research to determine the dynamics of market competition.

According to the HHI index, the market is divided into 3 groups according to the level of competition: low, medium and high. Thus, the HHI value is from 2500 to 10000 units. means low level of competition, 1500 to 2500 means medium level, and below 1500 means high level of competition.

Assets. The HHI index for December 2023, calculated by assets, amounted to 892, a decrease of 72 units compared to the corresponding period in 2022. This indicates increased competition in the banking system of Uzbekistan over the analyzed period.

Thus, the total assets of commercial banks increased by 17% and amounted to 652 trillion soums  for 2023. Last year, such banks as Hayot Bank, Apex Bank, Yangi Bank and Smart Bank began operating, the share of which in the total assets of the banking system reached 0.22% as of 1 January 2024.

At the same time, as a result of the acquisition by the Hungarian OTP Bank of 75% of the shares of Ipoteka Bank (June 2023), the share of private and banks with foreign capital in the total assets of the banking system reached 32%, increasing by 10 percentage points. compared to 2022.

In the Strategy for Reforming the Banking System of the Republic of Uzbekistan for 2020-2025, it is planned to increase the share of non-state banks to 60% in the total assets of the banking system by 2025.

Loans. The HHI index for loans amounted to 985 units, which improved by 92 units compared to 2022

As of 1 January 2024, the total balance of commercial bank loans amounted to 471.4 trillion soums (44.1% of GDP) and increased almost 1.2 times compared to the corresponding period last year. Over the same period of time, the weighted average nominal interest rate on loans in national currency increased from 22.3% to 24%, respectively. The real interest rate on the loan increased significantly from 10% (22.3%-12.3% (inflation)) to 15.2% (24%-8.8%).

In 2023, the volume of loans issued to individuals increased by 47% compared to 2022, and to legal entities by 12%.

Deposits. During the period under review, the HHI index for deposits increased from 761 units. up to 672 units During this period, the volume of total deposits increased by almost 25 trillion soums.
 
As of the beginning of 1 January 2024, the weighted average interest rate on time deposits up to 1 year in national currency was 18.4% compared to 17.6 in the previous year.

In the total volume of attracted deposits, the share of private banks increased from 37% as of January 1, 2023 to 49% by the end of the year.

At the same time, during this period the share of the 3 largest banks with a state share (Uznatsbank, Uzpromstroybank, Asaka Bank) in the total volume of deposits decreased from 31% to 25%.

In conclusion, we can say that the increased degree of competition in the banking system of our republic is associated with the entry of several new banks into the market during the year, as well as an increase in the activity of existing private banks.