Moody’s: Macroprudential Measures Ease Household Debt, Support Bank Asset Quality

Tashkent, Uzbekistan (UzDaily.com) — Household debt in Uzbekistan declined in the first half of 2025, strengthening borrowers’ repayment capacity and reducing default risks for banks, according to a Moody’s Ratings report.

The improvement follows tighter macroprudential measures by the Central Bank of Uzbekistan (CBU), including the introduction of a debt-service-to-income (DSTI) ratio limit. The DSTI cap of 50% for all loan types took effect on 1 January 2025.

As a result, the share of loans with DSTI at or below 50% rose to 78% in the first half of 2025, up from roughly 60% during the same period in 2024. The average DSTI across all borrowers fell from 36% to 33%.

The most notable gains were seen in mortgages and auto loans. Average DSTI for mortgages dropped from 69% to 50%, while auto loans improved even more sharply, falling from 68% to 38%.

Regulatory measures were complemented by improved financial conditions: nominal wages increased by an average of 17%, and retail loan interest rates fell. Auto loan rates, for example, declined to 23% annually in H1 2025 from 27% a year earlier. Retail lending accounted for 36% of total loans as of October 1, 2025.

In July, the CBU also imposed new loan-to-value (LTV) limits, setting a 75% cap on auto loans. These measures are expected to strengthen risk management and improve collateral coverage over the next 12–18 months.

Despite overall improvements in consumer lending, Moody’s noted rising risks in the microfinance sector. Microloan portfolios grew 73% year-on-year in H1 2025, but non-performing loans (NPLs) overdue more than 90 days rose from 2.7% to 4.4%. Provision coverage for these NPLs increased from 30% to 47% but remains insufficient. Part of the risk is mitigated through broader use of microloan insurance.

Overall, NPLs in Uzbekistan’s banking system declined to 3.7% of total loans as of October 1, down from 4.2% a year earlier.