Uzbek Banks Report Robust Q1 2026 Earnings Amid Growing Sector Competition

The first quarter of 2026 has seen notable financial advances among Uzbekistan's leading banks, including Octobank, Tengebank, Kapitalbank, Milliybank, and Hayotbank. Their recently published financial reports demonstrate not only rising revenues but also expanding asset bases and heightened competitive dynamics within the national banking sector.

Sector Growth and Asset Expansion

Collectively, the banks’ assets reached 15.52 trillion Uzbek soms, marking a substantial increase since the beginning of the period. Investment holdings represent the largest portion of these assets, totaling 6.71 trillion soms, underscoring the banks’ strategic focus on investment activities as a driving force behind asset growth.

"The diversification of income streams is evident, with non-interest income far surpassing interest income, indicating a shift in revenue models within Uzbekistan’s banking sector."

In terms of income composition, interest income totaled 238.3 billion soms, while non-interest income stood significantly higher at 1.2 trillion soms. This diversification signals a strategic pivot towards fee-based and other non-traditional banking revenues, which could potentially insulate banks from fluctuations in interest rate environments.

On the expenditure side, interest expenses were 176.9 billion soms, while non-interest expenses reached 1.04 trillion soms. Operational expenses accounted for 111.6 billion soms, with employee compensation making up a significant share at 73.8 billion soms. The banks also contributed 110 million soms to the government budget in income taxes during the reporting period.

Bank-Specific Performance Highlights

Tengebank experienced a remarkable surge in net profit, posting approximately 34 billion soms in Q1 2026 compared to just 920.9 million soms in the same period last year. This represents a multi-fold increase in profitability, positioning Tengebank on a trajectory that surpasses its full-year profits of 54.9 billion soms in 2025 and 36.2 billion soms in 2024.

While interest income remained stable, the net interest margin was negatively impacted due to increased provisions for potential loan and leasing losses, resulting in a net interest loss of 5.3 billion soms. Conversely, commission income skyrocketed from 12.8 billion soms to 57 billion soms, substantially driving overall profitability.

Tengebank’s loan portfolio grew to 4.5 trillion soms by early March, reflecting an 8.4% year-on-year increase. However, the share of non-performing loans also rose from 2.3% to 3.4%, indicating growing credit risk concerns.

Milliybank reported a net profit of 603.2 billion soms, marking an increase of 28.9% compared to Q1 2025. Interest income climbed to 4.7 trillion soms, a 15% rise year-on-year, while interest expenses totaled 2.5 trillion soms. Operational expenses increased by 26%, reaching 673.1 billion soms, with employee-related costs at 372.2 billion soms. The bank paid 22.5 billion soms in income taxes during this period.

Kapitalbank posted a net profit of 324.8 billion soms. Its assets expanded to 58.23 trillion soms, driven chiefly by credit and leasing operations valued at 36.6 trillion soms, which remain the bank’s primary growth engines. Interest income was 1.85 trillion soms, with non-interest income at 1.64 trillion soms. Expenses included 1.07 trillion soms in interest costs and 648.6 billion soms in non-interest expenses. Operational expenses were 715.7 billion soms, including 269.8 billion soms for staff wages.

Hayotbank recorded a net profit of 14.6 billion soms, with assets growing to 7.43 trillion soms. The bank’s main asset driver was also credit and leasing operations, at 5.63 trillion soms. Interest income totaled 332.5 billion soms, while non-interest income was 87.2 billion soms. Interest expenses amounted to 253.5 billion soms, and non-interest expenses were 22.2 billion soms. Operational expenses reached 66.8 billion soms, with employee costs accounting for 41.6 billion soms.

Macro-Economic Implications and Outlook

The robust profitability and asset growth across these banks highlight Uzbekistan's banking sector's resilience amid intensifying competition. The shift towards greater income diversification, especially through non-interest income channels such as commissions, suggests evolving business models designed to mitigate the impact of potential credit losses and interest rate volatility.

However, the rising share of non-performing loans, as evidenced particularly at Tengebank, signals heightened credit risk which could pose challenges if left unaddressed. Policymakers and bank management will need to balance growth ambitions with prudent risk management to sustain the sector's long-term stability.

These dynamics bear significance beyond Uzbekistan’s borders. As the country's banking sector deepens and diversifies, it contributes to regional financial stability and opens new avenues for foreign investment, aligning with broader economic modernization efforts. Monitoring these trends will be essential for global investors and policymakers assessing emerging market financial sector health and resilience.

Based on reporting by Deutsche Welle.