THE UZBEK BANKING SYSTEM

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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• THE UZBEK BANKING SYSTEM

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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest
Financing of investments
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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• 29 operating banks, down from 38 in 4 years
• Top 5 (NBU, Asaka, Uzpromstroybank,
  Pakhtabank, Ipoteka) control over 80 of T. A.
• 17 banks shares traded on the USE

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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• Specialised banks (Asaka automobile industry,
  Pakhtabank agriculture, cotton industry,
  Tadbirkorbank SME finance)
• 1997 presidential decree stimulating setting up
  private banks
• Minimum capital requirement (from 1 April 2007)
  USD 2.5 M for private, USD 5 M for other banks
• Deposit insurance provides compensation for 100
  of deposits up to 100 minimum wages, 90 for up
  to 250 MW
• 2004 government decision on creation of 2-level
  credit bureau system (National institute on
  credit information, managed by the Central Bank
  Inter-bank Credit Bureau (ICB) under Uzbek Banks
  Association)
• Banks closed in 2003-2005 C. Asian Cooperation
  and Development Bank, Karron Bank, Istiqbol Bank,
  Business Bank (March 2005)
• 2005 May Uzzhilsberbank and Zamin Bank merge
  into Mortgage Bank (Bank Ipoteka)
• In March 2006 Uzromstroybank and Uzprivatbank
  complete merger

Changes in H1 2006 licence of Ravnakbank
withdrawn, MicroCredit Bank established on the
bsasis of Tadbirkorbank, RD Express
Aussenhandels GmbH buys 40 of Savdogarbank
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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• Plastic cards
• Governments bank card project (September 2004)
• Plan to reach 3 M cards by 2007
• 3-year exception on property tax and 0 import
  duty on ATMs, card-related equipment, software
• 8,030 terminals (180)

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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• Role of foreign banks
• 6 of 29 banks with foreign capital (in form of
  JV) ABN Amro, UzKDB bank (former UZ Daewoo),
  Uzprivat, UT (with Turkish capital) , Bank
  Saderat, Savdogarbank. Except for ABN Amro, quite
  small
• 16 foreign banks have rep office in Tashkent
• Privatisation
• Privatisation states stakes in Tadbirkorbank,
  Savdogarbank, Trustbank, Ipak Yuli Bank,
  Aviabank, Gallabank, Privatbank sold.
• Asaka Bank to be sold by 2006, NBU by 2009

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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• Banking reform 2005-2007
• Special resolution signed by the President in
  April 2005
• Former specialised banks (Pakhtabank, Alokabank,
  Asaka, Gallabank) turned into universal banks
• Lending liberalised
• Deposit insurance introduced in 2002. By 2006
  nearly 200 types of deposit products developed
• Strenghtening of equity base from 1 January
  2007, minimum capital requirement USD 2.5 M for
  private banks, USD 5 M for state banks.
  Reinvested dividend becomes tax-free
• Mini-banks 1,450 of which 328 opened in 2005
• Micro-lending new special law passed in June
  2005

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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• Small loans
• Simplified procedure for loans up to USD 5,000
  (max. 3 years, 16 p.a.) State grants subsidies
  for half of interest payable
• Main players are the banks but role of other
  market participants (25 credit unions, 7
  lombards) also increases
• In 2005, 419.9bn UZS SME loan granted, 77
  funded by banks own funds, 18.1 by foreign
  loans, 4.9 by off-budget funds

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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest



Assets
In bn UZS
Retail deposits per capita USD 20 Negative
interest rate paid on private deposits without
Bank Saderat Iran, Trust bank
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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest



Banks assets and loan portfolio
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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest



Private deposits
In bn UZS
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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest



Equity
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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest



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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest
Low level of deposits banks need alternative
funding (incl. state funds). Small banks tend to
have higher L/D ratio
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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• Opportunities for growth
• Fee-based business money transfers (Uzbek
  diaspora in Russia, USA, UK) is the
  fastest-growing segment
• Bank cards state program to develop cashless
  payments
• Corporate bonds
• New services (leasing, factoring)
• Retail business
• Retail average deposit per person under 20 USD
• NBU dominates with 70 of retail deposits, 50 of
  retail loans
• Only few other banks are involved in retail
  business Alp Jamol, Zamin, Capital
• In 2005, retail loans grow to UZS 216.8bn, by
  92.2
• Plastic cards
• 2 M cards issued, 400 in a year
• 11,000 POS terminals
• 143 bn UZS turnover in 2005

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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• Leasing
• Number of leasers over 30
• Total volume grows by 21
• Tax incentives, improving legislation
• Pension payments
• Accumulative pension system introduced on 1
  January 2005
• Monopoly of Peoples Bank (Narodniy Bank)
• PB has gt 200 branches, 2,700 offices, 60 mini
  banks, 30,000 corporate and 9 M private clients
• PBs Total Assets UZS 191 bn
• Mortgages
• February 2005 Presidential decree On further
  development of housing construction and housing
  market
• Mortgage Crediting Fund created within the MinFin
• New Bank Ipoteka set up (merger of Uzzhilsberbank
  and Zamin Bank)

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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• Foreign funding
• Government drastically reduces amount of
  guarantees provided to UZ banks when borrowing
  from foreign banks
• In 12 years, UZ received investment loans FDI
  of USD of USD 14 bn, 90 with state guarantee
• International business
• Except for NBU, Pakhtabank and Asaka Bank few
  other Uzbek banks appear in international
  markets
• Uzzhilsberbank participates in EBRD trade
  finance program
• UzPrivatbank, Ipak Yuli have a EUR 6 M framework
  agreement with KfW for SME finance

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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest
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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest
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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest
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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest
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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest
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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest
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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest
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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest
INFORMATION ON SELECTED UZBEK BANKS
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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• The National Bank for Foreign Economic Activity
  of the Republic of Uzbekistan (NBU)
• Established in 1991 by Presidential Decree
• in state ownership, 40 was supposed to be
  offered to a foreign investor in 2004 but
  privatisation delayed to 2009
• acts as governments agent in international
  financial markets, as export-import bank,
  involved in project finance
• has 96 branches and 18 mini-banks
• subsidiary in Moscow (Asia-Invest Bank, No. 433
  by T.A. in Russia)
• 550,000 clients
• services over 70 of Uzbek foreign trade
• holds 52.2 of banking systems assets, about
  11 of authorised capital, 59.2 of loans
• in July 2005, the banks former First Deputy CEO
  and 13 other employees convicted for economic
  crimes
• Total Assets 2.6 bn USD
• authorised capital 20 M USD, equity 485 M USD

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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest
1999-2003 sharp decline of TA due to transfer of
FX reserves to CBU, unification of UZS rates
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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest
Asaka Bank

• Established in November 1995 to serve
  UzDaewooAuto
• 98.33 Ministry of Finance, 1.67 Association
  "Uzavtosanoat
• 27 branches, 62 mini banks
• Diversification since 1995, automobile production
  25 of loans
• Privatisation foreseen for 2005 with EBRD
  participation (letter of intent May 2002),
  delayed to 2006
• Total Assets 599.2 bn UZS (8.3 in 2005)
• Equity 155.8 bn UZS
• Loans 423.0 bn UZS

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Uzpromstroybank
15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• Established in 1991
• Main shareholder Uzbekneftegaz state oil and
  gas company (over 51)
• 3,828 employees
• Total Assets 521.5 bn UZS (21.9 in 2005)
• Equity 30.8 bn UZS
• Profit 2.7 bn UZS

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Pakhta Bank
15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• Established in July 1995
• Ownership state agricultural companies 31,
  Uzpakhtasanoatsotish 19, private companies
  40, individuals 10 (76,669 shareholders)
• 183 branches, 229 mini-banks, 6.500 employees
• 240,000 clients
• Specialised in agricultural finance (in
  particular cotton production, processing)
• Total Assets UZS 357.3 bn (34.4 in 2005)
• Equity UZS 51.3 bn

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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• Ipoteka Bank
• Specialised in retail business
• 580 communal and savings banks (outlets),
  incl. mobile banks to collect communal payments
• Total Assets (December 2005) 272.0 bn UZS
  (31.8)

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ABN Amro Bank UZ
15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• Largest foreign bank in UZ
• Established in December 1996
• Ownership ABN Amro Bank N.V. (58.8), NBU
  (17.6), EBRD (11.8), IFC (11.8)
• 1 branch
• Total Assets 103.9 bn UZS (-7.6)
• Equity 10.0 bn UZS
• Profit (2004) 140.7 M UZS, down 7.4 times

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UzKDB Bank (former UzDaewoo Bank)
15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• Established in July 1995
• Ownership KDB 61, Management 10, EBRD 27.8,
  NBU 5.6, Turon Bank
• 5.6
• 1 branch
• Market leader in M/M, securities business
• Korean Development Bank bought out Daewoos
  stake
• Total Assets (December 2005)58.2 bn UZS
  (24.8)
• Loans 14.9 bn UZS
• Equity 11.5 bn UZS

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Gallabank
15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• 31 branches, 62 mini banks
• 5,800 shareholders, incl. 3,300 individuals.
  Main shareholder Uzkhleboproduct State grain
  company
• Total Assets (2005) 71.9 bn UZS (-0.3)
• Loans 56.1 bn UZS (-6.9)
• Equity 16.3 bn UZS (31.8)
• Specialisation lending to enterprises in the
  grain industry

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Kapital Bank
15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• Established in 2001 as part of the Elsun Group
• Ownership 51 individuals, 49 private
  companies
• 1 full service, 6 retail branches
• Main business SME, retail
• Total Assets (December 2005) 53.4 bn UZS
  (192.2)

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Turon Bank
15th BACEE Country and Bank Conference 14-16
November 2006, Budapest

• Established in November 1990 as UZs very first
  commercial bank. It has a nationwide coverage
• Ownership Ministry of Agriculture 5,500
  shareholders
• 17 branches, 2 retail, 36 mini banks
• Planned retail expansion
• Total Assets (December 2005) 47.3 bn UZS
  (56.4)

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15th BACEE Country and Bank Conference 14-16
November 2006, Budapest
Aloqa Bank

• Established in November 1990 as a bank of the
  telecom industry
• Shareholders state agency of Telecommunications
  affiliated structures
• 10 full service branch
• Market segment telecom finance (icl. Uzbek part
  of Asian European fiber optic line
  (Frankfurt-Shyzai), state program of
  computerization and development of IT (2002-2010)
• Total Assets (December 2005) 33.6 bn AZS
  (20.4)
• Loans 15.17 bn AZS