Improving the credit risk management system in commercial banks

Abstract

This article examines the theoretical and practical aspects of improving the credit risk management system in commercial banks. Particular attention is paid to borrower creditworthiness assessment, loan portfolio monitoring, early identification of problem loans, portfolio diversification, stress testing, and the application of digital technologies. The study uses official statistical information from the Central Bank of the Republic of Uzbekistan and international principles developed by the Basel Committee. The analysis shows that the expansion of bank lending increases the importance of effective credit risk management. As of July 1, 2026, the total loan portfolio of commercial banks in Uzbekistan amounted to 642.8 trillion UZS, while non-performing loans reached 22.9 trillion UZS, representing 3.6% of total loans. Based on the analysis, an integrated approach to credit risk management is proposed, combining improved borrower assessment, data-driven credit scoring, portfolio diversification, early-warning systems, stress testing, and effective management of problem loans. The proposed approach can contribute to improving loan portfolio quality and strengthening the financial stability of commercial banks.