Retail Banking in Uzbekistan: People’s Bank Case

Sakhi Annaklichev Deputy Chairman

People’s Bank of Uzbekistan 1

Key Drivers of Retail Banking

• Constant innovation in banking sector• Rapid advances in information technology• Evolving macroeconomic environment• Financial markets reforms• Increased competition from non-banking

sector• Transformation from the “seller’s market” to

the “buyer’s market”

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Retail Banking: Features

• Center Focus: Individual Customers• 3 basic characteristics:

– multiple products (deposits, credit/debit cards, investments and securities);

– multiple channels of distribution (call centre, branch, Internet and kiosk); and – multiple customer groups (consumer, small

business, and corporate).

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• Retail banking in Uzbekistan shows consistent growth

• During 2011 retail loans grew by 42,35% and retail deposits by 32%

• Retail loans level reached 1,7 trln. Soums in 2011, making up 17% of the total loan portfolio

• Retail deposits size increased to 2,87 trln. Soums• Time deposits are gaining higher shares

Profile of Retail Banking in Uzbekistan

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People’s Bank Competitive Position

• No. 5 by asset size• No. 4 by owners’ equity• No. 1 by retail deposits mobilized,

with total market share of 23,5%• No.1 by retail client base• No.1 by number of branches

Deposits of legal entities

Loan Portfolio Total Assets Investment Portfolio

Equity Base Net Profit Deposits of Individuals

3,53%5,26% 6,07% 6,88% 6,91%

13,09%

23,54%

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People’s Bank: At a Glance

• Founded as a savings institution in 1875 in Tashkent• 1995 – Reorganized from the Savings Bank of Uzbekistan

into the State Commercial People’s Bank of Uzbekistan• Status: joint-stock holding company• Shareholders: Ministry of Finance (51%) and the Central

Bank of Uzbekistan (49%)• Agent of the Government in implementing social projects

and reforms (managing mandatory and cumulative Pension funds systems, distributing the growth of population welfares).

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People’s Bank MissionThe mission of the People’s Bank determines the nature and meaning of the Bank, underlining its role as of a financial agent of the Government in the implementation of social objectives, as well as ensuring the growth of the welfare of the people and the economy as a whole.

People’s Bank possessing the largest network of branches in Uzbekistan.is always closer to each of a client in every city, district and village.

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Facts about the People’s Bank

Standard & Poor's Ratings Agency affirmed 'B+' long-term and 'B' short-term counterparty credit ratings with Stable outlook.

As of 1 January 2012:• Total Assets = 1,62 trln soums• Deposits = 1,27 trln soums• Loans = 755 bln soums• Authorized capital 200,0 bln soums; paid up capital: 180,0

bln soums.

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Facts about the People’s Bank

Today People’s Bank is a universal banking organization providing all kinds of banking services ranging from issuing loans and accepting deposits, issuing letters of credit and servicing individual cross border remittances.

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Corporate Structure“Xalq

Insurance”

“Xalq Invest”

Retail Banking Corporate Banking

Accumulated Pension System

Conductor of Social Programs

Regional Branches (14)

Regional Branches (14)

District Branches

(175)

District Branches

(175)

“Xalq Lizing”

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Distribution Channels of the Bank’s Retailing

Money order offices (191)

FX offices (260)Mobile service

points (72)

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Bank’s Retail Operations

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Main Figures

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Main Figures

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Modern Retail Services

«Uyali pul» - a complete solution that ensures a convenient and secure e-service retail bank customers using the Internet and mobile phones. The Bank offers a comprehensive solution that allows you to almost completely satisfy all customer needs in a remote service.

UZPAYNET - non-banking on-line payment system that provides people through its more than 25,000 agent points with services for making payments for utilities, cell and land-line phones, Internet and IP-telephony, and many other, in the real time mode 24/7

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International Activities

In 2000 the People’s Bank became a Member of the World Savings Banks Institute the global representative of savings and retail banking.

WSBI represents savings and socially committed retail banks or associations thereof in 89 countries. WSBI works closely with international financial institutions and represents its members’ interests at an international level.

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International Activities

Since 2003 the Bank has been actively involved in micro-financing project with German Savings Bank Foundation for International Cooperation. The Bank has utilized credit line of the Foundation as the result new jobs were created as a result of this project over 100 specialists of the People’s Bank were trained by the experts of financial institutions in Germany.

As part of cooperation between the Foundation and the People’s Bank several other projects are being currently implemented. Among them is the micro-insurance project, which is aimed at providing insurance in rural areas of the country.

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International Activities

Areas of cooperation:

Short-term training courses for People’s Bank personnel:

IT technology micro-loans

treasury

savings

risk management

Technical assistance in developing International money transfer (remittances) from Korea – Uzbekistan – Korea

card business

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Challenges

• Diminishing margins due to intense competition from non-traditional retailers and other new market players

• Tightened Regulation: change in risk attitude, priority of safety and soundness, entrenching line of defense of bank clients

• Policy issues: financial inclusion, consumer protection, access to finance, responsible lending, prevention of financial crime (AML)

• Retention of customers• Concerns for safety with IT development

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Perspectives

• Rise in the middle class: ever increasing of the purchasing power, liberal attitude to personal debt

• Building a unified IT environment: – “branchless” banking– e-banking– consolidation of various operations

• Deepening of product development and differentiation

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