Despite the macroprudential measures taken, concerns remain in Uzbekistan about the growth of the population's debt burden, especially in the microloans segment, the Central Bank said in its 2024 Financial Stability Review.

Debt burden 

Last year, the average debt burden of individuals, inclusive of all obligations, increased slightly reaching 34%. That is, individuals used more than a third of their income to servicing all debts, including on bank loans, microloans and other obligations. For example, if a person earns 3 million soums per month, then he spends 1.02 million soums on loan payments.

Among individuals who attracted loans from banks, the debt service-to-income (DSTI) ratio of above 50% topped 40% of the total volume of loans. That is, almost half of the loans were issued to people who spend more than half of their monthly income on repaying loans.

The ratio of those whose debt burden was within 26-50% was 42%. While, 12% of borrowers have a high risk of losing solvency - their DSTI indicator exceeds 100%.

Car loans

According to the report, the situation in the car loan segment has improved: thanks to the Central Bank's measures, the risk level has decreased. The average DSTI for car loans decreased from 69% to 61%. In the second half of 2024, the ratio of borrowers with an indicator above 50% decreased by 23 percentage points - to 40%.

The tightening of macroprudential instruments has resulted in positive changes in the security of car loans with collateral. In particular, in 2024, with a LTV (loan-to-value ratio) above 80% (i.e. buyers could borrow 80 million soums or more to buy a car worth 100 million soums, paying a down payment of 20 million soums or less) decreased by 6 percentage points compared to 2023 and topped 48% of all car loans.

The weighted average LTV for car loans issued in 2024 was 73%, which is 9 percentage points less than in 2023.

Mortgages

For mortgage loans, the average LTV remained at 76%, recording slight increase compared to the previous year.

One fifth of individuals who took out a mortgage loan spend the bulk of their income on debt repayment. In 2024, 21% of mortgage borrowers had a DSTI exceeding 100%, meaning their debt exceeded their income.

The ratio of borrowers with a DSTI below 50% was 39%. The average DSTI among individuals who took out a mortgage (taking into account all bank and non-bank liabilities) was 65%.

Microloans

At the same time, risks have increased in the microloans sector. The ratio of problem loans is high, and the level of reserves formed in some banks remains low. Despite the fact that the debt burden indicator (34%) is lower than for mortgages and car loans, its growth rate is higher.

The volume of microloans issued and the number of borrowers continue to grow rapidly. At the end of 2024, the balance of microloans in banks' loan portfolios exceeded the volume of car loans by 6 percentage points and amounted to 42.4 trillion soums.

As of January 1, 2025, the number of microloan borrowers reached 2.3 million people — 37% more than a year earlier. For comparison: in 2019, 500 thousand borrowers had microloans (4.6 times less).

There are 1.7 microloan agreements per person (previously 0.4), which increases concerns about a possible excessive debt burden.

The lack of requirements for a clear purpose and collateral when issuing microloans increases the risk of borrowers failing to fulfill their obligations, which, in turn, increases the risk of credit losses for banks. Therefore, from July 24, the Central Bank has been tightening requirements for microloans. The ratio in banks' portfolios should not exceed 25%. Also, a microloan borrower cannot pay more than 50% on top of the amount taken within one year, taking into account all interest, fees, fines, penalties and other payments.

Risk of "contagion"

It is separately noted that about 23% of all loan agreements in the first half of 2024 were entered into with individuals without official income. In the second half of the year, this figure dropped to 13%, but such borrowers are still subject to increased risk levels.

The growing ratio of borrowers with multiple loan obligations is causing concern for the Central Bank. An increase in the number of borrowers with multiple loans in the portfolios of commercial banks may increase the risk of "contagion" between banks: a deterioration in the solvency of one client simultaneously affects the quality of assets in several banks at once.

According to the regulator, during 2024, 68% of individuals who received loans had more than one credit obligation. Among recipients of car loans and mortgages, the share of such borrowers was 42% and 48%, respectively. In the microcredit segment, this figure reached 70%.

Meanwhile, debt per borrower reached 37.6 million soums, increasing by 1.5% over the year. However, faster growth of GDP per capita compared to debt partially offset the growth of the debt burden.