Uzbek Banks Report Strong Q1 Profits Amid Rising Assets and Operational Costs

Overview of Uzbek Bank Sector Performance in Q1 2026

In the first quarter of 2026, Uzbekistan's key banks including Octobank, Tengebank, Kapitalbank, Milliybank, and Hayotbank published their financial results, revealing robust income growth and expanding assets despite rising operational costs. These developments carry significant implications for household budgets, savings, and currency stability in the country.

Asset Growth and Income Diversification

The combined assets of these banks reached 15.52 trillion Uzbek soms, marking significant growth since the beginning of the year. Investments formed the largest portion of these assets, totaling 6.71 trillion soms. This asset expansion reflects heightened banking activity within Uzbekistan's competitive financial sector.

On the income side, banks reported interest income of 238.3 billion soms alongside non-interest income of 1.2 trillion soms. This income diversification indicates that banks are expanding beyond traditional interest-based earnings through fees and other financial services, which could affect the cost and availability of banking products for consumers.

"Banks are increasingly relying on diversified revenue streams to boost profitability, a trend that could translate into new fees and service charges impacting everyday banking customers."

Rising Costs and Profit Margins

Despite growing income, banks faced substantial expenses: interest expenses amounted to 176.9 billion soms, and non-interest expenses reached 1.04 trillion soms. Operational costs totaled 111.6 billion soms, with employee salaries comprising 73.8 billion soms. These rising costs could influence banks' lending rates and fees, ultimately affecting household borrowing costs and savings returns.

Bank-Specific Performance Highlights

Tengebank posted a striking net profit increase to nearly 34 billion soms, up from less than 1 billion soms in the previous year’s corresponding period. However, its net interest result was negative due to increased reserves for potential credit losses. The significant growth in commission income, rising from 12.8 billion to 57 billion soms, was a key driver of its profitability. The bank's credit portfolio grew by 8.4% to 4.5 trillion soms, but non-performing loans increased from 2.3% to 3.4%, signaling rising credit risk.

Milliybank reported net profits of 603.2 billion soms, a 28.9% increase over the previous year’s first quarter, supported by a 15% rise in interest income to 4.7 trillion soms. However, operational expenses surged 26%, with employee costs accounting for 372.2 billion soms. The bank paid 22.5 billion soms in income taxes during the period.

Kapitalbank posted a net profit of 324.8 billion soms, with assets growing to 58.23 trillion soms. Lending and leasing formed the bulk of assets at 36.6 trillion soms. Interest income reached 1.85 trillion soms, while non-interest income was 1.64 trillion soms. Operational expenses stood at 715.7 billion soms, including 269.8 billion soms for staff, indicating increasing staff-related costs in the bank’s operations.

Hayotbank earned a net profit of 14.6 billion soms with assets of 7.43 trillion soms. Lending and leasing accounted for 5.63 trillion soms of assets. Interest income was 332.5 billion soms, while non-interest income totaled 87.2 billion soms. Operational expenses were relatively lower at 66.8 billion soms.

Implications for Consumers and Investors

The growth in bank assets and profits signals a robust banking sector that could support expanded credit availability for consumers and businesses. However, rising operational costs and increased non-performing loans may prompt banks to raise lending rates or fees, impacting household budgets and savings returns.

Investors should note the increasing diversification of bank income streams, especially rising commission revenues, suggesting a shift in how banks generate profits. This may translate to new or higher fees on banking services, which consumers should monitor closely.

Additionally, the elevated level of reserves for loan losses, particularly at Tengebank, indicates caution amid credit risk concerns, which could affect the stability of the banking sector and the national currency over time.

Overall, while Uzbek banks demonstrate strong financial results supporting economic activity, consumers and investors should stay informed about evolving costs and risks within the sector that may directly influence personal finance and investment decisions.

Based on reporting by Deutsche Welle.