Kyrgyzstan’s financial sector eyes double-digit growth

Kyrgyzstan’s financial sector eyes double-digit growth / Photo: Shutterstock, photo editor: Serikzhan Kovlanbayev

Kyrgyzstan’s financial sector is expanding rapidly, fueled by 11% year-over-year GDP growth. Last year, banking sector assets increased by 50%, while stock exchange trading volume doubled.

Banking sector dominates the system

The banking sector remains the backbone of the country’s financial system. By the end of 2025, total banking assets had risen 48.5% to 1.2 trillion soms (about $13.7 billion). The sector’s share of GDP reached 61.3%.

Out of the 22 active banks, three institutions drove the main market trends. Over the past year, they strengthened their positions further: the combined share of two state-owned banks and one privately owned bank rose to 52.8% of total assets, up from 43.8% in 2024.

Leadership reshuffle among top banks

The top three banks remained unchanged, but their rankings shifted. Eldik Bank, owned by the Kyrgyz government, moved from third to first place over the past year. Its assets grew more than 2.5 times, reaching 265.7 billion soms. A new issuance of common shares boosted its equity capital to 81.7 billion soms. The bank now originates roughly one in 10 loans in the system.

Another state-owned lender, Aiyl Bank, also posted strong growth, with assets rising 28.8% to 203.7 billion soms. While it specializes in financing the agro-industrial sector, the bank is actively expanding into small and medium-size enterprise lending across other industries.

Private sector player bets on digital

Joining the two state-owned institutions in the top three is privately held Mbank, controlled by former Kyrgyz Prime Minister Omurbek Babanov. The bank launched a major digital transformation in mid-2021, replacing its management team, rebuilding its IT infrastructure, and developing a mobile app.

Last year, the bank completed its rebranding (formerly Commercial Bank Kyrgyzstan) and now positions itself as the country’s first digital bank.

Mbank’s assets grew 69.8% to 169.9 billion soms. More than half of that increase came from lending, with loan balances (including impairment provisions) rising 91.3% to 85.5 billion soms.

Loan growth and consumer lending dominance

By the end of 2025, the total loan portfolio of Kyrgyz banks reached 507.0 billion soms (about $5.8 billion), up 48.8% year over year in nominal terms. As in many developing economies with similar profiles, consumer lending continues to dominate.

Two of the largest banks, Eldik and Aiyl, have begun actively rolling out products through «Islamic windows» — dedicated units within conventional banks that offer Sharia-compliant services while maintaining separate accounting.

As of the end of 2025, six banks in the country either operated Islamic windows or had fully transitioned to this model.

Profitability under pressure

Net profit for Kyrgyz banks totaled 33 billion soms in 2025, up from 30 billion soms in 2024. However, profitability indicators declined over the year. Return on assets (ROA) fell from 4.3% to 3.3%, while return on equity (ROE) dropped from 32.5% to 21.9%.

The decline was driven by intensifying competition and a narrowing interest rate spread — the difference between asset and liability rates — which decreased from 7.1% at the end of 2024 to 5.4% in December 2025 amid tighter monetary policy.

Digitalization weighs on fee income

Rapid digitalization across the banking sector has reduced commission income, with its share of total revenue falling from 12.0% to 7.9% by year-end. The decline is partly attributable to a moratorium imposed by the National Bank of the Kyrgyz Republic on fees for domestic transfers. The measure, initially set to expire at the end of 2025, has since been extended for another year.

Stock exchange trading hits new highs

The Kyrgyz Stock Exchange (KSE) posted record trading volumes for the fourth consecutive year. Following explosive growth in 2024, total trading volume doubled again in 2025, reaching 219.5 billion soms.

This surge was driven almost entirely by primary market activity, which accounted for 95.6% of all transactions. According to estimates, three issuers — Eldik Bank, the State Mortgage Company, and Airports of Kyrgyzstan — generated more than half of total trading volume. All three are state-controlled entities; the first two are wholly owned by the government, while Airports of Kyrgyzstan is majority-owned.

Airports of Kyrgyzstan deal highlights retail participation

The Airports of Kyrgyzstan transaction stood out due to the presence of minority shareholders, requiring shares to be allocated among a broader investor base. The placement was conducted privately among existing shareholders, with allocations made proportionally to their holdings.

Freedom Broker, a relatively new entrant to the Kyrgyz market, acted as broker for the deal. The firm reported that this was the first transaction in the country to fully utilize its digital solutions, with account opening and order submission completed entirely online.

New entrant pushes digital access

According to Freedom Broker, the fully digital approach enabled shareholders across the country to participate in the offering remotely. The company launched full-scale operations in Kyrgyzstan in June 2025, opening an office in Bishkek and introducing its Tradernet mobile app.

Prior to the launch, the firm completed licensing procedures and adapted its platform to local regulatory requirements and market conditions.

Potential boost from «People’s IPO» program

If the Kyrgyz government proceeds with the proposed «People’s IPO» program currently under discussion, Freedom Broker says it is prepared to provide both technological and advisory support for listing state assets.

The company argues that its digital tools could broaden investor access and help stimulate secondary market activity. In addition to local securities, the platform offers retail investors direct access to major global exchanges, including the NYSE and Nasdaq.

Exchange modernization gains momentum

Freedom Broker’s approach aligns with the Kyrgyz Stock Exchange’s broader digital modernization efforts. In 2025, the KSE secured a grant from the Eurasian Development Bank (EDB) to upgrade its IT infrastructure.

The exchange has since implemented the Quik trading system, enabling real-time online trading and improving market accessibility for investors.