Kyrgyzstan’s financial sector expanded at a record pace in the first quarter of 2026, driven largely by government spending on housing and infrastructure projects, according to data from the country’s central bank, stock exchange and commercial banks.
Bank assets reach record high
Total assets of Kyrgyzstan’s banking sector climbed to nearly 1.5 trillion soms (about $17 billion) during the first three months of 2026, an increase of 23%, or 278 billion soms, from the previous quarter.
According to historical data published by the National Bank, this was the fastest quarterly asset growth in at least 17 years.
Roughly half of the increase came from higher cash holdings, which rose by 151 billion soms, or 2.7 times. Such growth is highly unusual for Kyrgyzstan’s banking sector and was concentrated in just three banks.
Sanctioned banks report sharp increases in cash holdings
Keremet Bank, which has been subject to U.S. sanctions since early 2025, reported that its cash assets surged from 903 million soms at the end of 2025 to 75.9 billion soms by the end of March 2026 — an 84-fold increase. The rise was accompanied by a nearly equivalent increase in liabilities to banks and other financial institutions.
The bank did not publicly disclose the transaction through the Kyrgyz Stock Exchange, where its shares had previously been listed, and did not issue a public explanation.
Another sanctioned lender, Capital Bank, also posted a dramatic increase in liquidity. The bank, which came under government control in 2024 and was added to the U.K. sanctions list in August 2025, reported that cash and balances held at the National Bank rose from 1.3 billion soms to 68.3 billion soms during the first quarter. Other liabilities increased by a similar amount.
By contrast, the country’s largest lender by assets, ABank (formerly Aiyl), recorded growth driven by customer activity rather than extraordinary balance-sheet movements. Cash and cash equivalents increased by 20.9 billion soms, while customer deposits and accounts grew even more.
Securities drive additional growth
Beyond cash, banks expanded their holdings of securities by 93.8 billion soms during the quarter. Other assets increased by 45.7 billion soms, while lending to customers rose by 33.1 billion soms.
The increase in securities holdings was the largest recorded in at least 17 years, surpassing the previous quarterly record set in the second quarter of 2025.
State Mortgage Company reshapes housing finance
Analysts attribute much of the increase in securities holdings to the government’s financing model for subsidized housing.
Although banks’ mortgage portfolios declined by 16.4%, or 10.6 billion soms, during the first quarter, this does not necessarily reflect weakening demand for housing finance.
Instead, the market has increasingly been shaped by the State Mortgage Company (SMC). Lending through the company’s partner banks has declined, while direct lending by the state-owned company has expanded.
For more than two years, the SMC has also been constructing residential housing itself. As a result, rent-to-own housing programs have become a core part of its business, alongside residential construction.
Stock exchange trading nearly doubles
Trading volume on the Kyrgyz Stock Exchange reached 86.9 billion soms (about $994 million) during the first quarter of 2026, almost double the level recorded during the same period a year earlier, when the exchange posted its strongest annual performance to date.
The market remains heavily dominated by state-owned companies.
According to exchange data, 98.7% of all trading took place on the primary market, reflecting the government’s role as the principal purchaser of securities issued to recapitalize state-owned enterprises.
State companies dominate securities issuance
The largest issuers during the first quarter were the State Mortgage Company, Kyrgyzaltyn and Airports of Kyrgyzstan, the state-owned airport operator that manages six international and five regional airports.
Unlike the first two issuers, Airports of Kyrgyzstan has minority private shareholders. As of the end of 2024, nearly 88% of the company was owned by the state through the State Property Management Fund and the Social Fund of the Kyrgyz Republic. The remaining shares were held by individual and corporate investors.
The company’s seventh share issuance mirrored the structure of its sixth, with shares offered through a private placement to existing shareholders in proportion to their ownership stakes. The Kyrgyz subsidiary of Freedom Broker acted as broker for the transaction.
Digital share placement expands access for investors
The latest share placement was conducted entirely online using digital tools developed by Freedom Broker, allowing shareholders across Kyrgyzstan to participate remotely.
The broker previously used the same digital format for the company’s sixth share issue, which was considered a milestone for Kyrgyzstan’s securities market because it enabled regional investors to take part without visiting a brokerage office.
Freedom Broker expands beyond retail investing
Freedom Broker entered the Kyrgyz market about a year ago, initially focusing on retail investors.
The company introduced digital account opening, enabling clients to open brokerage accounts within minutes, trade through a mobile app and gain direct access to international securities, including shares of Apple, Amazon and Tesla.
The broker has since expanded into corporate finance. In February 2026, the Russian-Kyrgyz Development Fund selected Freedom Broker’s Kyrgyz subsidiary to serve as arranger and underwriter for a pilot $20 million foreign-currency bond issue, although the placement has not yet taken place.
Airports of Kyrgyzstan plans record share issue
In March, Airports of Kyrgyzstan announced its eighth share issuance, the largest in the company’s history.
Shareholders approved the placement of nearly 47.9 million registered common shares with a par value of 424.1 soms each. Based on those terms, the offering could raise as much as 20.3 billion soms.
As with the previous two offerings, the placement will be conducted privately, with shares distributed proportionally among existing shareholders recorded in the shareholder register as of the end of February 2026.
Capital raising supports airport expansion
The latest capital increase is intended to finance the company’s investment program.
Airports of Kyrgyzstan is modernizing existing airports, constructing new facilities and expanding its airline business. The company illustrates how government-backed investment projects continue to account for much of the activity on Kyrgyzstan’s capital markets.
Over the past four years, Kyrgyzstan has undertaken a broad airport modernization program aimed at improving domestic air connectivity and strengthening the country’s integration into international aviation networks.
Regional airports in Talas and Naryn have reopened after standing idle for 26 years. Reconstruction of the runway at the old Jalal-Abad airport has been completed, while a new Category 4E international airport is under construction near the city. Modernization projects are also underway at the international airports in Osh, Karakol and Manas.
Meanwhile, Asman Airlines, a wholly owned subsidiary of Airports of Kyrgyzstan established two years ago, has expanded its fleet with three Bombardier Dash 8 Q400 aircraft, with a fourth expected to be delivered.
Multiple funding sources back modernization
The airport development program is being financed through a combination of retained earnings, bank loans and direct government capital injections.
Since 2025, the government, as the company’s majority shareholder, has repeatedly increased Airports of Kyrgyzstan’s authorized capital through private share placements on the Kyrgyz Stock Exchange.
EU lifts long-standing aviation ban
In March 2026, Airports of Kyrgyzstan signed an agreement with BBAM Aircraft Leasing to acquire two Airbus A321ceo aircraft, which are expected to be used for medium-haul international routes.
The purchase comes shortly after the European Commission announced in June 2026 that it had removed Kyrgyzstan from the European Union’s aviation safety blacklist.
The restrictions, which had barred Kyrgyz airlines from operating flights into EU airspace, had been in place for 20 years.
