National banking system demonstrates effectiveness and stability

Assets of commercial banks in the first half of 2013 increased by 30.7% and exceeded 37 trillion soums. (Currency rates of CB from 05.08.2013 1$=2107,93soums),

The Central Bank of Uzbekistan held an enlarged board meeting to discuss the outcomes of the activities of the banking system in the first half of 2013 and implementation of the major directions and priorities for the future.

The monetary policy in the first half of the year was aimed at implementation of estimated macroeconomic indicators, measures on further reformation of the banking system, enhancement of its stability, meeting high international rating indexes.

In the reporting period, extensive work was done to further increase the level of capitalization of the banking system, strengthen its liquidity and financial stability. As a result, today indicators of the banking system not just meet the generally accepted standards, but exceed them in some respects. In particular, the present level of capital adequacy of the banking system reached 24.3%, which is three times higher than the current minimum requirements of the Basel Committee on Banking Supervision (8%). As of July 1, 2013 this figure exceeded 6.3 trillion soums. For the past several years, the current level of liquidity has been exceeding 65%, which is twice higher than the minimum level.

Effective banking supervision in line with international standards, monitoring of liquidity and bank assets quality have enabled domestic banks to get positive ratings from international rating agencies.

Currently, all 29 commercial banks of the country have received a high rating of ‘stable’ from such leading international rating companies as Moody\'s, Standard & Poor\'s and Fitch Ratings. Of these, 23 banks have confirmed the positive ratings for 2013.

As of the beginning of this year the banks have taken large-scale measures to preserve growth rates of the country’s economy, improve its competitiveness, upgrade fundamental sectors, and accelerate technological renewal. For instance, the total amount of loans to the real economy sector increased by 31% and currently stands at more than 21.3 trillion soums. The volume of loans for investment purposes increased by 1.3 times against the same period last year, and exceeded 3.4 trillion soums as of July.

Ongoing financial reorganization of insolvent enterprises and streamlining of management mechanisms, production upgrade, technical and technological extension contributed to complete rehabilitation of production activity in 123 enterprises, which were then sold to new strategic investors. Those companies exported their products to $601.5 million.

Implementation of measures on creation of favorable business climate for development of small businesses is a special part the banking system. As a result, the volume of loans to small businesses increased by 1.3 times and amounted to 3.7 trillion soums. The volume of micro loans has also increased by 1.4 times, and amounted to 775 billion soums.

It is worth to note that presently the banks are paying serious attention to involving young people and graduates of professional colleges in entrepreneurship, and financing their business projects. 54 billion soums of loans has been allocated for the development of their business this year , which is 2.3 times higher as compared to the same period last year.

Stable activity of domestic commercial banks, strengthening of their credibility from year to year, as well as income growth is a serious platform to draw funds of citizens and businesses to bank deposits. Expansion of the resource base through the increased level of capitalization of banks along with attraction of private capital into the sector contributed to tending growth of deposits. For instance, the ratio grew by 30.5% as compared to the same period last year, and currently stands at more than 23.1 trillion soums.

Besides, the share of banks in the structure of financial services increases from year to year. In the first half this indicator reached 86.4%. According to experts, it is one of the clearest examples of the impact of targeted measures taken to increase the volume and quality of banking services to the public and business entities, and consistent reformation of the banking sector.

(Source: “Uzbekistan Today” newspaper)