Loan-Loss Reserves, Bank Earnings, and State Support in Uzbekistan's State-Owned Banks: Evidence From Three Business Models

System-level indicators provide an overview of credit risk exposure across the banking sector, while loan-loss reserves are recognized, adjusted, and utilized at the individual bank level. This study examines financial assets and loan-loss reserves at three state-owned banks in Uzbekistan representing distinct business models: Xalq Bank (retail and social lending), Asakabank (corporate lending), and Microcreditbank (microfinance and small-business financing). The analysis draws on audited financial statements prepared in accordance with International Financial Reporting Standards (IFRS), statutory annual reports, monthly Central Bank data on problem loans, and relevant legal and regulatory documents. At Xalq Bank, the share of Stage 3 loans in gross loans declined from 13.7% to 5.2% in 2025, primarily reflecting write-offs amounting to UZS 1.9 trillion. A shift in credit-loss expense from a charge of UZS 0.54 trillion to a reversal of UZS 0.99 trillion accounted for the entire increase in profit before tax, while pre-provision profit remained broadly unchanged at approximately UZS 1.3 trillion. At Asakabank, provisions represented 96% of the combined amount of provisions and net profit in 2024, compared with 72.5% at Microcreditbank in 2025. In May 2026, the three banks collectively accounted for 103% of the monthly net increase in problem loans across the banking system, with their individual problem-loan ratios rising by 0.7–3.5 percentage points. Government support measures, including budget-funded loss compensation, a separate provisioning regime, and a capital injection for Asakabank, partially serve as alternatives to conventional provisioning mechanisms. The study identifies six gaps in existing analytical practices and proposes a set of bank-level indicators to address them.