Standard and Poor’s revises Uzbek bank rating to Positive
Baku, Azerbaijan, Oct. 16
By Fakhri Vakilov-Trend:
Standar and Poor’s (S&P) Global Ratings revised its outlook on Uzbekistan’s Davr-Bank to positive from stable due to stable asset quality, and affirmed its 'B-/B' issuer credit ratings, Trend reports citing S&P.
Davr-Bank's financial performance has been improving in the Uzbekistan banking sector's challenging operating environment, read the message.
The positive outlook reflects a possible upgrade of Davr-Bank in the next 12 months if its asset quality continues to improve, while it maintains sufficient capital during its expansion phase, S&P reported.
“We expect that the bank's capitalization will remain at an adequate level, with our risk-adjusted capital (RAC) ratio improving closer to 10 percent in the next 12-18 months,” read the message.
S&P also expect that the bank will maintain a solid profitability, with return on equity at 35-40 percent.
“We would revise the outlook to stable if Davr-Bank's lending growth results in weaker capitalization of the bank, with our RAC ratio dropping close to 7 percent. This could happen if the bank increases its lending activity much faster than we currently expect,” read the message.
Additionally, S&P would revise the outlook to stable in case of a deterioration of the bank's underwriting standards resulting in a greater share of non-performing loans and higher impairment charges, or if its funding and liquidity metrics deteriorate.
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