Uzbek Banks Report Strong Q1 2026 Earnings, Signaling Sector Growth and Competitive Shift

The first quarter of 2026 has demonstrated robust financial performance for Uzbekistan’s banking sector leaders, including Octobank, Tengebank, Kapitalbank, Milliybank, and Hayotbank. Their recent earnings reports reveal notable growth in profits, asset bases, and competitive dynamics within the market.

Financial Highlights and Sector Trends

Collectively, the banks reported a cumulative asset volume reaching 15.52 trillion Uzbek soums, marking a significant increase compared to the start of the period. Investments constitute the largest share of these assets, totaling 6.71 trillion soums, underscoring a strategic emphasis on diversified asset allocation.

Income streams exhibited diversity, with interest revenues reported at 238.3 billion soums, while non-interest income surged to 1.2 trillion soums. This diversification indicates a maturation of revenue sources beyond traditional interest-driven models.

On the expense side, interest expenses amounted to 176.9 billion soums and non-interest expenses stood at 1.04 trillion soums. Operational expenditures totaled 111.6 billion soums, of which 73.8 billion soums were allocated to employee compensation. Tax contributions to the state budget during the quarter reached 110 million soums.

Individual Bank Performance and Market Implications

"Tengebank’s net profit nearly multiplied, driven largely by a sharp increase in commission income, despite negative net interest results due to elevated loan loss provisions."

Tengebank displayed the most dramatic growth, with net profit escalating to nearly 34.0 billion soums in Q1 2026 from just 920.9 million soums in the same period last year. For context, Tengebank closed 2025 with a profit of 54.9 billion soums, up from 36.2 billion soums in 2024.

Interest income remained largely stable; however, increased provisions for potential loan and leasing losses pushed net interest income into negative territory at -5.3 billion soums. Meanwhile, commission income soared from 12.8 billion to 57.0 billion soums, providing the main catalyst for the bank’s strong quarterly profitability.

Tengebank’s loan portfolio expanded by 8.4% year-over-year to 4.5 trillion soums, though the proportion of non-performing loans climbed from 2.3% to 3.4%, highlighting rising credit risk considerations.

Milliybank also reported substantial profitability, with net income of 603.2 billion soums—an increase of 28.9% compared to Q1 2025. Interest revenues jumped 15% year-over-year to 4.7 trillion soums, while interest expenses totaled 2.5 trillion soums.

Operational expenses rose by 26% over the previous year’s quarter, reaching 673.1 billion soums, including 372.2 billion soums in employee-related costs. The bank contributed 22.5 billion soums in income tax during the period.

Kapitalbank posted a net profit of 324.8 billion soums and saw its total assets rise to 58.23 trillion soums. The bank’s asset growth was primarily driven by credit and leasing operations amounting to 36.6 trillion soums, the sector’s dominant operational segment.

Interest income totaled 1.85 trillion soums, with non-interest income close behind at 1.64 trillion soums. Expenses included 1.07 trillion soums in interest outflows and 648.6 billion soums in non-interest costs. Operational expenses were 715.7 billion soums, including 269.8 billion soums for employee compensation.

Hayotbank recorded a modest net profit of 14.6 billion soums with assets reaching 7.43 trillion soums. The majority of its assets were allocated to credit and leasing portfolios valued at 5.63 trillion soums.

Interest income stood at 332.5 billion soums, while non-interest income was at 87.2 billion soums. Interest expenses were significant at 253.5 billion soums, and non-interest expenses totaled 22.2 billion soums. Operational expenses reached 66.8 billion soums, including 41.6 billion soums in staff-related costs.

Market and Equity Research Outlook

The strong earnings momentum across major Uzbek banks signals a sector undergoing both growth and increased competition. The rise in commission-based income, particularly notable in Tengebank’s performance, suggests a strategic pivot that could affect sectoral valuations and investor interest on regional equity markets.

Credit portfolio expansions alongside rising non-performing loan ratios highlight evolving credit risk profiles, signaling cautious monitoring by market participants and equity analysts. These dynamics may influence sector rotation decisions, with investors potentially favoring banks demonstrating diversified income streams and disciplined risk management.

The overall growth in operational costs, especially personnel expenses, reflects banks’ investments in capacity and efficiency, which are crucial for long-term competitiveness. Trading volumes in related financial stocks may respond positively to reported profit growth but will remain sensitive to developments in asset quality and macroeconomic conditions.

Analysts recommend close attention to quarterly earnings releases for updated valuations and risk assessments, as the Uzbek banking sector navigates both expansionary pressures and competitive shifts ahead.

Based on reporting by Deutsche Welle.