President of Uzbekistan Islam Karimov stated this at the meeting of the Cabinet of Ministers dedicated to the results of social-economic development of Uzbekistan in 2009 and important priorities of economic programme of 2010.

Current state of banking system

Currently, banking system of Uzbekistan is one of the most stable, which meets strict international requirements and has sustainable positions on some set norms, Uzbek leader said. He added that the level of capital adequacy of the Uzbek bank exceed 23%, which is up threefold of international standards, set by Basil Committee.

He said 14 commercial banks of Uzbekistan, assets of which make up 90% of the Uzbek bankins system, received stable ratings from leading international rating agencies like Fitch Ratings, Moody’s and Standard and Poor’s.

Currently, aggregate capital of the bank exceeds twice the volume of deposits of population and legal entities at the banking deposits, which fully guarantees timely payment. Aggregate current liquidity of the banking system exceeds current liabilities of the banks on external payments by 10 times, Uzbek president said. He added that firm “security cushion” was created in the banking system.

Liquidity and sustainability of local banks serve as powerful factor for growth of trust to banking system, mobilization of free funds of enterprises and population to deposits, president said. He said the volume of population deposits grew 1.7 times in 2009. He noted that in last ten years, internal resources, directed at crediting real sector of economy, rose by 25 times.

“In the result, the structure of credit portfolio of the banks changed drastically. If in 2000, 54% of the credit portfolio was formed due to external lending, in 2009, 84% of credit portfolio was formed due to internal resources,” the Uzbek head said.

He said Uzbekistan attracts external resources mainly for long-term and to modernize strategic industries of economy and support of small and private businesses.

Uzbek head said total volume of credit resources directed to real sector of economy rose 14 times in 2009 compared to 2000. At the same time, the share of banking loans to investment goals made up 70% in total credit portfolio.

Future targets of the banking system

During his speech, the Uzbek President Islam Karimov set future targets for further development of the banking system. He said the commercial banks should turn into large investment institutions.

President of Uzbekistan said the Central Bank of Uzbekistan, Finance Ministry of Uzbekistan in cooperation with commercial banks should develop programme on further increasing aggregate capital of commercial banks. He said the growth of aggregate capital should make up at least 20% and in next two years, its share in GDP should reach at lest to 10% to GDP.

President Islam Karimov said additionally it is necessary to introduce new banking services to attract resources of population and legal entities to long-term deposits of the banks and ensure at least 30% growth and create firm base for increasing share of long-term credits in economy of the country due to internal resources.

He said it is necessary to change criteria on assessment of commercial banks’ activity and to assess their work through the growth of long-term credit investments and attraction of internal resources.

Uzbek leader underlined work of National Bank of Uzbekistan for Foreign Economic Activity and Uzpromstroybank, share of long-term loans in their credit portfolio account 85% and 71% respectively.

He said it is necessary to strengthen role of commercial banks in financing of small and private businesses and farmers. In 2009, the volume of banking crediting of small businesses rose 1.5 times year-on-year and the volume of issued microloans rose twice.

President Karimov said it is planed to allocate at least 2.5 trillion soums to support small and private businesses or ensure growth rate at 1.4 times year-on-year in 2010. The volume of microloans will rise 1.3 times to 420 billion soums in 2010.