Important Issues of Increasing the Active Operations Profitability of Commercial Banks

Abstract

Financial stability of commercial banks directly depends on the profitability of commercial banks’ active operations. This is because, firstly, an optimal level of profitability of assets allows a Bank to support normative levels of net interest margin and net interest income, which is an essential condition to ensure commercial banks’ financial stability. Secondly, the main aim of any commercial Bank is to maximize its income. Thirdly, the banks' profit is an important source for the formation of the capital base. However, in many countries with transitional economies, including Uzbekistan, there are problems connected with improving the profitability of the commercial banks active operations. In particular, big commercial banks of the Republic of Uzbekistan have a relatively high level of reserve deductions which are intended to cover future loan losses.