Читать книгу The role of banks in the regional economic development of Uzbekistan: lessons from the German experience - Nodira Abdunazarova - Страница 3

First, let us consider the basic facts about Uzbekistan's economy and banking system during the period of 2007-2012. Uzbekistan had GDP growth of over 8% since 2007 and the CPI inflation rate was around 7% (Table 1). Although about 50% of the population lives in rural communities, currently the percentage of agriculture in the country's GDP is less than 20%, the percentage of the industrial sector together with building, transportation and communication made up 40% of the GDP (the State Committee on Statistics of Uzbekistan, 2013). It is worth noting that in 2012 the share of small businesses in the country's GDP made up more than 54%.

Table 1

Main macroeconomic indicators of Uzbekistan

Source: the State Committee on Statistics and Central Bank of the Republic of Uzbekistan, IMF

In the post crisis period, Uzbekistan experienced growth due to reforms in the industrial sectors and the relatively high prices for resources - main export earners (gold, copper, gas, etc). Uzbekistan is the world's largest producer of cotton and holds the second position for its exports.

The financial system of Uzbekistan didn't have serious drawbacks from the global economic crisis, primarily due to its relative low exposure to the international financial markets.

Table 2

Main indicators of Uzbekistan's banking system

Source: The Central Bank of the Republic of Uzbekistan.

The banking system relies more on internal resources, as reported by the Central bank of Uzbekistan, at the end of 2012 the share of loans from domestic sources in the banks' total loan portfolio made up to 85.8%. External borrowings were used mainly for the long-term lending for investment projects on modernization of strategic sectors and supporting small businesses.

By the beginning of the year 2013 there were 29 commercial banks, including 3 large state-owned banks, 9 private banks and 4 banks with foreign capital (Table 2). There were 4 small- and medium-sized regional private banks which operate outside the capital city. There were 829 local branches of commercial banks in total. These commercial banks are the main credit providers in the regions; there are also less than 30 small microfinance organizations in Uzbekistan.

All Uzbek commercial banks received a "stable" rating from the international rating agencies such as Moody's, Standard and Poor's, and Fitch. In 2012, the banking system's capital adequacy ratio of about 24.3% remained high by international standards and the level of non-performing loans was relatively low (IMF, 2013).

The Central bank declares about 3 of the biggest state-owned banks (National bank for foreign economic activity of the Republic of Uzbekistan, Xalq Bank (People's bank), and Asaka bank, but other banks also have the government's share in their equity (Table 3). Uzbek's large state-owned banks finance long-term strategic projects in communication, transportation, and the building industry, among others.

Table 3

General information about Uzbek large banks

Source: The Central Bank of the Republic of Uzbekistan. Information about the main shareholders was taken from the banks' official websites.

It is worth noting that the German regional savings banks promote their experience in similar financial institutions in developing and in transition countries. The Savings Banks Foundation for International Cooperation (SBFIC) had several financial projects in Uzbekistan, aiming to improve people's living conditions by enhancing their capacity to save money, countrywide lending to small and start-up businesses, introducing micro-insurance services, and training for bank assistants. The main partner of the German savings banks' group in Uzbekistan is Xalq Bank which has the largest branch network in the country. During the period 2003-2008 the SBFIC had supported the reformulation of Xalq Bank's business strategy towards retail banking. The project was composed of an introduction of risk (mainly credit) management, a development of new products, and an improvement of branch network performance (SBFIC, 2008).

Xalq Bank is the oldest financial institution in Uzbekistan, which was opened in 1875 in Tashkent city. By 1896 its branches operated in other Uzbek cities, accumulated deposits and provided letters of credit and government securities. During the Soviet period, it was the state-owned bank called "Uzsberbank" (Uzbek Saving Bank). After the dissolution of the Soviet Union, Uzsberbank was transformed into the state-owned Xalq Bank on October 4, 1995. It is important to mention that at the beginning of 1994, 98.5% of the total savings in Uzbekistan was accumulated by Xalq Bank (Uzbank.net, 2011). It is also worth noting that the pensions of all retired Uzbekistan citizens are accumulated on their accounts at Xalq Bank. Also, the bank is the financial agent of the government in targeted assistance to low-income families and benefits for children (children's allowances).

There are other large banks which aim to develop strategic sectors in the Uzbek regions. For example, Qishloq Qurilish Bank focuses on long-term mortgage lending, especially in rural areas. Agro Bank provides financial services to agricultural enterprises and farm households.

During the last decade the government has introduced several strategic programs on reformation and liberalization of the banking system. The last program for the period 2011-2015 has composed complex measures on further improving the stability of the commercial banks and achieving high international standards. The central and local authorities together with commercial banks are responsible for fulfilling the main goals of this program (Decree of the President of Uzbekistan #1438, 2010).

In 2008 the Decree of the President of Uzbekistan "On measures to further raise the financial stability of the enterprises of the real sector of economy" was accepted for the purpose of financial recovery of insolvent enterprises during the global financial crisis. As a result, till 2013 the large Uzbek banks accepted 171 bankrupt enterprises to their balance (Uzdaily.uz, 2013). The main part of these enterprises was companies with debts and with the value of less than US $2 million. For managing the assets of these enterprises the banks established management companies or specialized sub-divisions. The banks have invested over 442,6 billion soums of their own resources ((approximately US $200 million) official currency rate on 14.10.2013 1$=2158.36 soums). The Central Bank declared that as a result of the banks' investments, 156 enterprises rehabilitated their activities and created over 25,000 new jobs. Currently, 122 enterprises were realized to investors. One can claim that these measures to rescue bankrupt enterprises were important for financial stability in the real sector. On the other hand, the administrative order on the acceptance of insolvent enterprises to the state-owned banks' balances could be a challenge for the Uzbek banking system during the global financial crisis.

Due to a lack of data, we cannot analyze the distribution of credit among the sectors from 2007 to 2013. However, the available data shows that in 2011 more than 40% of the total bank credit was concentrated in the industrial sector (Graph 1). Stimulation of this sector is one of the main priorities of the current economic policy. The Uzbek large banks finance the long-term strategic projects in such areas as chemical, electric power, and the automobile industry, among others.

Graph 1

Distribution of the banks' loans among the economic sectors in 2011

Source: The Central Bank of the Republic of Uzbekistan.

In 1995 the commercial banks established a lobbying organization - Uzbekistan Banking Association. By its status, the Banking Association is a voluntary, non-commercial and non-governmental organization which was established to protect the rights and interests of commercial banks and assist them in various issues. Nowadays, the Association consolidates 22 from 29 commercial banks of the republic, with more than 90% of the total banking sector assets in Uzbekistan.

The Uzbekistan's Banking Association composes numerous committees on bank legislation, audit, taxation, corporate governance, banking ethics, and other issues. Also, the Association includes a bank rating agency, companies' credit history, insurance, consulting, syndicated credit, and others. Together with the Bank and Finance Academy of Uzbekistan, bank colleges, regional training centers, and international financial institutions, the Association organizes different trainings, seminars, and round tables for bank specialists. The Association is eligible to offer changes to the legislative regulations regarding commercial banks.

Overall, there seems to be evidence to indicate that during the period 2007-2012 Uzbekistan's banking system remained stable. Nevertheless, one can claim that there is still scope for the further development.

A high concentration of the banks' credit in Tashkent city is one of the main problems. The share of the banks' credit in the capital city exceeds the share in sums of Gross Regional Product (GRP) (Graph 2).

Graph 2

Distribution of the banks' loans among the Uzbekistan's regions and share in sum of the regions' GRP in 2011 (%)

Source: Calculations are based on the statistical newsletters published by the State Committee on Statistics and Central Bank of the Republic of Uzbekistan.

Uzbekistan is divided into 13 regions (including the capital city - Tashkent) and 1 autonomous republic - Karakalpakstan. Tashkent city, Tashkent region, Qashqadaryo region, and Bukhara region are traditionally considered as high income territories. The Karakalpakstan autonomous republic, Jizzakh region, and Sirdaryo region are usually referred to as low income areas.

The analysis of banking system development in the Uzbek regions from 2007 to 2012 is not provided due to a lack of data. However, available data shows that in 2011 more than 50% of total bank loans were absorbed by the capital city. Banks tend to concentrate their credit in the Tashkent region and Tashkent city. These regions absorb 60% of bank credit, but produce only about 30% of the total regions' GRP. Only in Tashkent city does the share of bank loans exceed its share in sum of the regions' GRP. The distribution of the banks' loans among the other regions does not vary substantially.

Now, let us consider the levels of savings accumulation in banks among the Uzbek regions. The issue was analyzed by Urmanova (2011), who tried to determine the potential reserves for credit institutions to raise funds from savings and analyzed a special indicator called the Index of Savings Business Development (ISD), which is calculated as the ratio of bank savings per capita relative to the per capita income in 2010 for each region (Table 4).

Table 4

Reserves for attracting people's deposits according to people's income in 2010 (in %)

Source: Urmanova 2011)

Urmanova (2011) found that in the regional context there is a considerable differentiation in the levels of this indicator. The highest index value was in Xorazm region - 9.15%, the lowest - in Namangan region (4.02%). Here it should be noted that Xorazm region does not have the highest per capita income (income level is on the 8th place). The difference in the level of per capita income between the regions with maximum and minimum values ​​of ISD is only about 2%.

The author assumed that if in the Xorazm region the level of per capita income ISD is 9.15%, consequently the region with the higher income per capita can have at least the same level of ISD. Hence for calculating the potential reserves, Xorazm region was taken as a benchmark. So in regions with higher levels of per capita income, there are possibilities of reaching the level of 9.15%. For regions with lower per capita income the calculation was carried out on the basis of proportional ratio of income and deposits growth.

Urmanova (2011) concluded that the majority of the Uzbek regions may use significant reserves for attracting savings by banks. According to the results, people's savings in Uzbekistan's banks should be higher than the actual level by 47%. These results indicate the real opportunities of increasing the amount of deposits in banks.

The evidence presented in this section suggests that although the government makes efforts in order to involve banks into the regional economic processes, Uzbekistan's banking system is still characterized by a high concentration of assets in one region. The banking system performs well, but an unequal access to bank resources may decrease financial opportunities for enterprises in less developed regions. It is necessary to work out a mechanism which would help to make banks essential players in the rural and peripheral areas. The next section, therefore, moves on to discuss the German private and public regional banks.