Tashkent, Uzbekistan (UzDaily.com) -- Moody’s Investors Service ("Moody’s") today took rating actions on 7 Uzbek banks. These follow the upgrade of Uzbekistan’s sovereign rating to Ba3 (stable outlook) from B1 (positive outlook), and raising of the country’s local and foreign currency ceilings to Ba1 and Ba3 from Ba2 and B1, respectively, on 20 January 2023. 

-- Agrobank, Ipoteka Bank and National Bank of Uzbekistan (NBU)

The upgrade of the banks’ long-term local and foreign currency deposit ratings to Ba3 from B1 follows the sovereign rating action on Uzbekistan and reflects Moody’s assumption of a very high probability of support from the government of Uzbekistan resulting in two notches of uplift from the banks’ b2 BCAs. The change of outlook on the long-term bank deposit ratings to stable from positive reflects Moody’s expectation that these banks’ credit profiles will remain broadly stable in the next 12-18 months, as well as the stable outlook on the sovereign rating.

The upgrade of these banks’ long-term local and foreign currency Counterparty Risk Ratings (CRRs) to Ba3 from B1, and the upgrade of the long-term Counterparty Risk Assessments (CR Assessments) to Ba3(cr) from B1(cr) follow the change in country’s local and foreign currency ceilings to Ba1 and Ba3 from Ba2 and B1, respectively.

-- Aloqabank JSC

The affirmation of the bank’s long-term local and foreign currency deposit ratings at B1 reflects Moody’s assumption of a high probability of support from the government of Uzbekistan resulting in one notch of uplift from the bank’s BCA of b2. The outlook on the long-term deposit ratings remains positive and is driven by the improving trends in the bank’s standalone credit profile.

The upgrade of the bank’s long-term local and foreign currency CRRs to Ba3 from B1, and the upgrade of the long-term CR Assessment to Ba3(cr) from B1(cr) follow the change in country’s local and foreign currency ceilings to Ba1 and Ba3 from Ba2 and B1, respectively.

-- JSC Asakabank

The affirmation of the bank’s long-term local and foreign currency deposit ratings at B1 reflects Moody’s assumption of a very high probability of support from the government of Uzbekistan resulting in two notches of uplift from the bank’s BCA of b3. The outlook on the long-term deposit ratings remains positive and is driven by the improving trends in the bank’s standalone credit profile.

The upgrade of the bank’s long-term local and foreign currency CRRs to Ba3 from B1, and the upgrade of the long-term CR Assessment to Ba3(cr) from B1(cr) follow the change in country’s local and foreign currency ceilings to Ba1 and Ba3 from Ba2 and B1, respectively.

-- JSCB Tenge Bank

The upgrades of the bank’s long-term foreign currency deposit rating and the long-term foreign currency CRR to Ba3 from B1 follows the change in the country’s foreign currency ceiling to Ba3 from B1. The change of outlook on the long-term foreign currency deposit rating to stable from positive reflects the change in country’s foreign currency ceiling to Ba3 from B1 and Moody’s view that the risks stemming from the bank’s unseasoned business model and its very fast growth will be sufficiently counterbalanced by the liquidity and capital support from JSCB Tenge Bank’s parent, Halyk Savings Bank of Kazakhstan (Baa2 stable, ba2). Thus, the likelihood of an upgrade of the long-term deposit ratings in the next 12-18 months is limited.

-- Qishloq Qurilish Bank (QQB)

The upgrade of the bank’s long-term local and foreign currency CRRs to Ba3 from B1, and the upgrade of the long-term CR Assessment to Ba3(cr) from B1(cr) follow the change in country’s local and foreign currency ceilings to Ba1 and Ba3 from Ba2 and B1, respectively.

The stable outlook on QQB’s long-term deposit ratings continues to be driven by Moody’s expectation that QQB’s asset quality and profitability will gradually recover and that its capital, liquidity, and funding will remain stable.

An improvement in asset quality metrics coupled with sustainable robust profitability and capital levels could lead to an upgrade of the banks’ BCA. This could result in positive pressure on the deposit ratings of all of the banks except for Agrobank, Ipoteka Bank, NBU, and JSCB Tenge Bank whose ratings are at the same level as Uzbekistan’s Ba3 issuer rating.

Positive outlooks on the long-term deposit ratings of Aloqabank JSC and JSC Asakabank signal that rating downgrades are unlikely over the next 12-18 months. The rating outlooks could be changed to stable or negative if there were signs of erosion of the banks’ financial fundamentals, namely asset quality, capitalisation and profitability. Concurrently, the ratings of Agrobank, Aloqabank JSC, JSC Asakabank, Ipoteka Bank, NBU and QQB could be downgraded, if the government of Uzbekistan appeared less likely to continue its support to these banks.