Business plan

The main concept, which served as the basis for forming the Business Plan, is the mission of the Bank, namely the creation of a powerful financial supermarket operating in the most profitable segments of the most promising sectors of the financial market.

The Bank’s goal is to further strengthen the position of a modern, innovative and dynamically developing bank of Uzbekistan, providing a full range of financial services throughout the country.

FORCAST OF THE BANK’S DEVELOPMENT

In 2023, the Bank will continue to improve work in the new automated banking system and equipment for its operation. This step will make it possible to introduce new interactive services, provide prompt and round-the-clock customer service, and also increase the quality of data analysis. The business productivity will be significantly improved through more efficient cost management, implementation of a cost-benefit analysis model, and efficient allocation of the regulatory capital. In 2023, the Bank sets itself the task of developing the interest-bearing business at a more active pace, focusing its efforts on retail and small business lending, which in turn will help make its loan portfolio more diversified.

Growth in income will be achieved through the systematic development of all strategic business areas.

CORPORATE BUSINESS

The Bank conditionally divides corporate customers into 2 main segments:

• large corporate customers;
• small businesses.

The large business segment is represented by the most demanding customers who prefer to be served in several banks, have large amounts of money, and use a whole range of financial services. Such customers demand promptness in making payments and lending, as well as complex products that include complex financial instruments. They prefer to work with highly qualified employees of the bank who know the specific aspects of the industry in which the customers operate.

The Bank plans to develop customer service in this segment by offering individual financial solutions. The Bank will expand its product range in the field of short-term lending, trade financing, foreign exchange transactions and liquidity management products. At that, it is important to increase the speed of providing services, especially in terms of lending. The Bank will create mechanisms for prompt interaction between customer service managers and representatives of the customer.

The small business segment is of significant interest to the Bank, as it provides an acceptable level of profitability and, at the same time, allows the effective diversification of the Bank’s customer base. In 2023, it is planned to further develop the product in the area of business mortgages for legal entities. Thanks to economic reforms and active support of small businesses by the State, the number of potential customers of the Bank is growing rapidly. The small business customer service policy in 2023 will involve developing the service of customers through remote and digital channels, where they will be provided with a convenient solution to control and manage their business finances. Further development of digital channels will unload customer service managers and open up opportunities for the introduction of new packages of personalized services, taking into account industry specifics.

When building up the customer base, emphasis will be placed on customers with large cash balances and good funds remaining rates. This will make it possible to increase the balances on the accounts of legal entities (paid and free) up to 17.0 trillion soums by the end of 2023 (including in foreign currency).

Servicing accounts of corporate customers in the national currency will, according to forecasts, bring the commission income in the amount of at least 108.8 billion soums, and servicing accounts in foreign currency and providing services to support foreign economic activity will bring the commission income in the amount of 496.2 billion soums.

In order to maintain the stability of the resource base, special attention will be paid to attracting fixed-term deposits of legal entities. By the end of 2023, it is planned to bring their balance up to 5,608 billion soums (including in foreign currency), interest expenses on which will amount to 643.5 billion soums. Also, the Bank plans to increase letter-of-credit transactions in order to strengthen the deposit base.

The funds raised will be the main source of financing for the active operations of the Bank, namely lending. The loan portfolio in 2023 is planned to be increased to 27.5 trillion soums, of which 21.8 trillion soums are loans in the national currency and 5.9 trillion soums are loans in foreign currency in soums equivalent. Of these, the loan portfolio of legal entities is to total 6.8 trillion soums, of which 1.0 trillion soums are loans in the national currency and 5.8 trillion soums are loans in foreign currency in soums equivalent. In 2023, the balance of the loan portfolio for the Department of Small Lending is projected to reach 2.8 trillion soums.

RETAIL BUSINESS

The development of the retail business, and, in particular, retail lending, is a priority area, largely due to the possibility of diversifying the loan portfolio as a whole. In 2023, the balance of the retail loan portfolio is projected to reach 20.7 trillion soums. Taking into account the expected volume of issuance and interest rates, the Bank intends to receive income from lending to individuals in 2023 in the amount of 3,819 billion soums. The volume of auto loans is expected to increase given the growth rate of market demand for this product.

To develop the retail business in 2023, the Bank shall have to:

• make such simple transactions as regular payments, transfer of funds, making payments for goods and services and saving funds convenient, prompt and profitable;
• establish and develop partner programs for plastic cards with international payment systems;
• build long-term and close relationships with customers. The Bank will develop product packages that are more attractive than standalone products. To compile such packages, the Bank will expand its ability to collect, store and analyze customer information.

It is expected that in 2023 the Bank will earn income in the amount of 793 billion soums from servicing individuals. At that, income from services provided using plastic cards (issuing cards, processing transactions, accepting payments and income from issuing cash from ATMs) will amount to 675.3 billion soums. Income from services provided in retail business departments (money transfers, transfer of funds from accounts, cash withdrawal and conversion operations) is expected to reach 117.8 billion soums.

Moreover, retail customers are strategically important to the Bank, as their funds form the bulk of the Bank’s resource base and are subject to a low risk of outflow. In 2023, it is planned to bring balances on deposits of individuals to the level of 20.1 trillion soums, of which fixed-term deposits will amount to 13.3 trillion soums (including in foreign currency). Taking into consideration the current average deposit rates, namely 5% for deposits in foreign currency and 20% for deposits in the national currency, as well as new potential products for deposits, a gradual increase in balances not only in the national currency, but also in foreign currency is expected. Along with this, the Bank plans to strengthen the base of on-demand deposits of individuals in foreign currency, which will lead to an increase in the number of non-resident customers.

THE BANK’S EXPENSES AND FINANCIAL PERFORMANCE

The forecast of interest expenses for 2023 (excluding interest on interbranch deposits) is 2,662.1 billion soums. The growth in interest expenses is associated with an increase in cash balances on customers’ accounts. In addition, the current requirements of the Central Bank for a long-term resource base have been preserved, for the fulfillment of which the Bank will need to additionally attract fixed-term deposits for a period of more than a year, which are more expensive than “short” resources.

Interest-free expenses in 2023 are planned at the level of
603.6 billion soums. By 2023, growth is expected, which is driven by an increase in commission income, as well as income in the form of foreign exchange differences from spot and conversion transactions.

The forecast of operating expenses for 2023 is 1,216 billion soums. The main expenditure items that will have an impact on the growth of operating expenses are:

• Employee costs in the form of wages and other benefits;
• Depreciation of fixed assets and intangible assets;
• Administrative expenses, promotions, taxes, legal, consulting, auditing, insurance services and other operating expenses.

Given the above trends and forecasts, the Bank’s net profit for 2023 is projected at a level of at least 1,727 billion soums. At that, the return on assets (ROA) will be 4.6%, while the return on equity (ROE) will be 51.1% and the cost to income ratio (CIR) will be 34.2%.