Microloans Pose Main Domestic Risk to Uzbek Banks

Tashkent, Uzbekistan (UzDaily.uz) — Credit risk in the microloan segment remains one of the primary domestic risks to the financial stability of Uzbekistan, according to the 2025 financial stability review published by the Central Bank.

The number of microloan recipients in commercial banks reached nearly 2.7 million people as of 1 January 2026, representing a 16% increase compared to the previous year. The average number of contracts per borrower rose from 1.7 to 1.9. The Central Bank warned that the accumulation of multiple debt obligations by a single borrower increases their debt burden and intensifies the risk of credit losses for banks.

The average debt service-to-income ratio for microloans rose from 37% to 40% during 2025.

The quality of the non-performing part of the portfolio also deteriorated. Loans classified as doubtful and hopeless accounted for 49% of problem microloans by the end of the year, which is 2 percentage points higher than in 2024.

The outstanding balance on microloans reached 48.9 trillion soums, or 8% of the total credit portfolio of banks. The share of non-performing loans within the segment itself remained at 4%, showing practically no change over the year. Provisions cover 50% of problem microloans, an increase of 11 percentage points compared to the previous year.

Market concentration is declining, with the Herfindahl-Hirschman Index for outstanding microloans standing at 920 points, a decrease of 76 units over the year, which corresponds to a low level of concentration. At the same time, the share of microloans in the credit portfolio of certain banks remains high, the regulator noted.

Retail lending as a whole continues to grow faster than corporate lending. The share of loans to individuals in the banking system portfolio increased from 33% to 36% during 2025. The debt of legal entities grew by 8% to 383.7 trillion soums.

A survey of market participants included in the review indicates a similar outlook. Banks identified the primary threats as the rising debt burden of the population (32% of responses), exchange rate volatility (31%), and inflation.