CIS Banks Against Problem Assets: How Octobank Became an Example of Successful Risk Management
2024 was a turning point for the banking sector of the CIS countries. In the era of global economic challenges, many financial institutions in the region faced the problem of a high share of non-performing loans, which threatened the stability of their operations. However, among the banks that successfully overcame the crisis, Octobank, one of the leading players in the banking system of Uzbekistan, stands out.
The bank’s key achievement was getting rid of problem assets worth 324 billion soums, which allowed it to completely zero out the share of such assets in its portfolio. If in May 2024 the share of non-performing loans in Octobank was 76.9%, then by June it was reduced to 0%. This result not only strengthened the bank’s financial system, but also brought it to the forefront in the fight against economic challenges in the region.
Oktobank’s success was the result of targeted management actions and a systematic approach to working with clients. The bank actively used debt restructuring mechanisms, offered individual solutions for borrowers facing financial difficulties, and developed partnerships based on trust.
This policy not only allowed the bank to avoid financial losses, but also created the basis for strengthening its reputation in the local and international markets.
If we compare the situation in other CIS countries, it remains ambiguous.
In Kazakhstan, for example, banks actively increased reserves to cover losses on problem assets in 2024, and the share of such loans fell to only 7.5% from 9.2% a year earlier. However, the country still has significant risks associated with the corporate sector, where many companies continue to experience difficulties in meeting their debt obligations.
In Russia, the situation in the banking sector has proven more stable, but the share of problem loans remains at an average of 5-6%. The country’s central bank continues to tighten regulation, requiring banks to increase the transparency of operations and improve the quality of assessing the creditworthiness of clients.
Against this backdrop, the success of Uzbekistan, and especially Oktobank, looks particularly impressive.
"If a bank can work with problem debt, write off bad debt or make mutually beneficial restructuring for problem borrowers to pay off loans, then this is recognition of real financial conditions. If it is possible to attract new capital at the same time - it is generally wonderful. After all, money must work. An increase in the amount of working assets leads to the fact that the bank can work with a higher multiplier. Accelerating its lending activity and, as a result, increasing its potential profit, as well as the overall economic activity in the country," commented independent financial analyst Vitaly Kalugin.
The reduction of the share of problem assets to 0% has become a landmark event not only for Oktobank, but also for the entire financial system of Uzbekistan. This strengthens the confidence of both local clients and international investors who see potential in a stable and predictable banking system of the country.
Oktobank, in turn, has already announced its plans for further expansion and investment in the digitalization of banking services in order to maintain its leading position in the market.
Overall, 2024 can be considered the beginning of a new chapter for the CIS banking sector, where competent management of problem assets is becoming a key factor for success.