Uzbekistan, Tashkent, Oct.23 / Trend, D.Azizov /
Standard & Poor's Ratings Services affirmed its 'B' long-term and 'B' short-term counterparty credit ratings on National Bank For Foreign Economic Activity Of The Republic Of Uzbekistan (NBU), Halk Bank (Halk), and Uzpromstroybank. The outlooks on all three banks remain stable, the agency's press release says.
"The affirmations reflect our view that strong ongoing government support has somewhat sheltered the financial performance of NBU, Halk Bank, and Uzpromstroybank during the global economic slowdown, and has helped them maintain adequate capitalization and balance-sheet liquidity," the press release says.
Because of its direct, visible control of the banks, Standard & Poor's believes the Uzbek government would provide timely and sufficient support to the banks if necessary.
All three banks have significant domestic franchises and operate to a large degree as agents of government policy in serving particular sectors of the economy. "Taking into account these factors and due to our view of Uzbekistan's creditworthiness, we factor our support expectations into the ratings of the three banks without additional notches above their stand-alone credit profiles", Standard & Poor's said.
In accordance with our criteria for GREs, Standard & Poor's assesses the likelihood of extraordinary government support to both NBU and Halk Bank as "extremely high", based on: The banks' "critical" role for the local economy as the largest lender to the strategic industries (NBU) and the largest savings bank (Halk); and both banks' "very strong" link with the government via 100% state ownership.
Standard & Poor's assesses the likelihood of extraordinary state support in the event of financial distress to Uzpromstroybank as "very high", because of the bank's "very important" role for Uzbekistan's economy as one of the largest lenders to key sectors; and Uzpromstroy's "very strong" link with the government because of its ownership by the Ministry of Finance (35%) and the Uzbekistan Fund for Reconstruction and Development (26%).
"The stable outlooks on NBU, Halk Bank, and Uzpromstroybank balance high credit risks with Standard & Poor's expectation of continued strong government support and ownership," the press release says.
"Ratings upside potential for the banks is limited, but their stand-alone credit profiles could benefit from diversification of the loan profile and funding structure, while maintaining acceptable asset quality metrics and adequate capitalization and liquidity," the S&P said.
The NBU is the largest financial and credit institutions of the republic. The bank was created in September 1991 as a government agent in international financial markets and currently acts as a universal commercial bank.
The bank has 100 branches and offices and serves 2.2 million individuals and entities.
One of priorities of the NBU is financing small and private businesses, including via attracting foreign credit lines.
NBU attracts foreign investments almost to all industries. Largest volume of investments were directed at oil processing, machinery, food industry, metallurgy, textile, agriculture, etc.
Halk Bank is the sixth-largest bank in Uzbekistan established in 1995 in Uzbekistan. It is the leading bank in terms of retail deposits, with a 23% market share. Halk Bank is turning into a universal bank, willing to grow its corporate loan book and increase its international visibility, which is positive for its business diversification.
The bank serves about 30,000 legal and nine million physical entities.
Uzpromstroybank open joint stock commercial bank, one of the largest commercial banks of Uzbekistan was established in 1922.
Official exchange rate is 1624,72 soums to $1 Oct.22.