Uzbek Banks See Growth in Loans and Problematic Credits in Q1 2026 Amid State Bank Expansion
Uzbekistan’s banking sector loan portfolio rises sharply while problematic loans increase, highlighting risks for international investors and US businesses.
In the first quarter of 2026, Uzbekistan's banking sector experienced a notable increase in the volume of loans issued, alongside a rise in problematic credits. This trend reflects a mixed outlook for international investors, including American companies with interests in the region.
Loan Portfolio Growth and Rising Non-Performing Loans
According to data released by Uzbekistan's Central Bank, the total loan portfolio of the country's banking system grew by 19.3 trillion Uzbek soums, reaching over 623.3 trillion soums by the end of Q1 2026. However, problematic loans — those at risk of default — also increased by 1.8 trillion soums, totaling nearly 19.9 trillion soums. This rise was largely driven by growth in state-owned banks.
State banks' portfolios expanded by 11.1 trillion soums during the quarter. The most significant increases were recorded in Agrobank (+5.44 trillion soums), Milliybank (+2.63 trillion soums), Xalq Bank (+1.95 trillion soums), and Aloqabank (+1.89 trillion soums). Conversely, some banks such as SQB and Asakabank saw reductions in their loan portfolios.
Among private-sector banks, Hamkorbank, Hayot Bank, and Kapitalbank showed active loan growth, while TBC Bank and Orient Finans Bank reduced their loan issuance.
"The increase in problematic loans, particularly concentrated in state banks, may signify emerging credit risk challenges that could affect foreign businesses exposed to the Uzbek financial market," noted financial analysts.
The problematic loans primarily increased by 1.46 trillion soums within state banks, with SQB, Aloqabank, and Asakabank contributing most significantly to this rise. Some banks, like Ipoteka Bank, managed to reduce their problematic credit portfolios by 316 billion soums, but others such as Anor Bank and Garant Bank saw increases.
Despite the rise in problematic loans, the share of such loans relative to the total loan portfolio fell from 3.19% to 2.99%, thanks to rapid growth in overall lending volume. This ratio decline can be interpreted cautiously, as rapid credit expansion may mask underlying asset quality deterioration.
Implications for US Businesses and Investors
The expansion of credit in Uzbekistan’s state banks combined with a rise in non-performing loans presents a risk profile that international investors, including US corporations with supply chains or investment portfolios in Central Asia, need to monitor closely. The state banks’ dominant role in credit extension and the concentration of rising problematic loans in these institutions may signal vulnerabilities in the financial sector’s resilience.
For American companies engaged in sectors such as agriculture, telecommunications, and infrastructure, which often rely on local financing or partnerships with Uzbek financial institutions, this trend could affect credit availability and cost.
Moreover, as Uzbekistan continues to open its economy and attract foreign investment, the quality of the banking sector is a critical factor influencing Washington’s economic diplomacy and trade strategies in the region. The US government and private investors will likely watch the trajectory of Uzbekistan’s banking system closely to adjust risk assessments and investment decisions accordingly.
Given these dynamics, US businesses are advised to conduct rigorous due diligence on local financial partners and remain attentive to regulatory developments and Central Bank announcements within Uzbekistan.
