Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDRs) of three Uzbekistan-based private banks, Joint Stock Innovation Commercial Bank Ipak Yuli (IY) and PJSB Trustbank (TB) at ‘B’ and of JSCB Universal Bank (UB) at ‘B-’. The Outlooks on all banks are Stable.
The Long-Term IDRs of the three banks are based on their intrinsic creditworthiness, as reflected in their Viability Rates (VRs). The ‘b’ VRs of TB and IY capture their good asset quality and robust profitability, and stable capital and funding profiles. UB’s VR is one notch lower, reflecting the bank’s much more aggressive loan growth in recent years, looser underwriting standards, some corporate governance weaknesses and weaker performance.
All banks’ ratings are constrained by Uzbekistan’s still challenging and volatile operating environment which, in Fitch’s view, has a higher relative influence on credit profiles of TB and IY.
The banks operate in a low-income economy (per capita GDP was USD1,700 in 2019). The banking system is highly dollarised, with foreign currency (FC) loans making up 58% of sector loans at end-3Q19, and dominated by state-owned banks that accounted for 86% of total assets. Positively, healthy economic growth in Uzbekistan (we expect real GDP growth at 5.5% in 2019 and 5.9% in 2020) and gradually improving banking penetration support the sector’s dynamics.
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