Tashkent, Uzbekistan (UzDaily.com) — Despite ongoing macroprudential measures, concerns persist in Uzbekistan regarding the rising debt burden on households, particularly in the microcredit sector. This is highlighted in the Central Bank’s 2024 Financial Stability Review.

Over the past year, the average total debt burden of individuals, accounting for all financial obligations, slightly increased to 34%. This means that more than one-third of citizens’ monthly income was allocated to debt repayment, including bank loans, microloans, and other borrowings. For example, with a monthly income of 3 million soums, about 1.02 million soums went toward debt payments.

Among bank clients, a significant share—40%—of loans was given to individuals whose monthly debt service exceeds half of their income. Another 42% of borrowers carry a debt burden between 26% and 50% of their income. Particularly worrying is that 12% of borrowers have debt service ratios exceeding 100%, indicating a high risk of insolvency.

The auto loan sector shows some improvement. Thanks to measures taken by the Central Bank, risks in this segment have decreased. The average Debt Service to Income (DSTI) ratio for auto loans dropped from 69% to 61%.

In the second half of 2024, the share of borrowers with DSTI above 50% fell by 23 percentage points to 40%. Collateral quality also improved: loans with a loan-to-value (LTV) ratio above 80% fell to 48%, six points lower than in 2023. The average LTV for auto loans was 73%, nine points less than last year.

In the mortgage sector, the average LTV remained nearly unchanged at 76%, while the debt burden remains high. In 2024, 21% of mortgage borrowers had DSTI ratios above 100%, meaning debt payments exceeded income. The share of borrowers with DSTI below 50% was 39%, with an average DSTI of 65% in this group.

The most strained situation is in microcredit. Although the debt burden here is formally lower—34% compared to mortgages and auto loans—the growth rate far outpaces other segments. Both the volume of microloans and the number of borrowers rose sharply. By the end of 2024, the total microloan portfolio exceeded auto loans by 6 percentage points, reaching 42.4 trillion soums. The number of borrowers increased to 2.3 million, 37% more than the previous year. For comparison, in 2019 only 500,000 people had microloans—4.6 times fewer.

The average number of microloan agreements per borrower also rose significantly—from 0.4 to 1.7—raising concerns about excessive indebtedness. The lack of clear regulations on the use of funds and collateral increases the risk of defaults and potential losses for banks.

Therefore, from July 24, the Central Bank will enforce stricter rules: microloans cannot exceed 25% of a bank’s portfolio, and total annual payments on a microloan (including interest, fees, and penalties) must not surpass 50% of the original loan amount.

The report also highlights borrower income levels. In the first half of 2024, about 23% of all credit agreements were with individuals without official income. In the second half, this fell to 13%, but risks remain high for such borrowers.

The Central Bank is also concerned about the growing number of borrowers with multiple concurrent loans. In 2024, 68% of individuals with loans had more than one debt. This share was 42% in the auto loan segment, 48% in mortgages, and reached 70% in microcredit.

This situation increases the risk of “contagion,” where one borrower’s inability to pay can negatively impact asset quality across multiple banks.

By early 2025, the average debt per borrower reached 37.6 million soums, up 1.5% year-on-year.

However, rapid GDP per capita growth has partially offset the rising debt burden, helping to contain systemic risks in the credit sector for now.