BAKU, Azerbaijan, Dec. 23
By Fakhri Vakilov - Trend:
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, Trend reports citing Fitch.
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.
In Fitch's view, the ongoing structural banking reform, aimed at curtailing policy lending and reducing the dominance of the state in the banking system, could positively affect the Uzbekistan banking sector.
The banks' '5' Support Ratings and Support Rating Floors of 'No Floor' (NF) capture their very limited franchises in a highly concentrated banking sector and thus their low systemic importance, so support from the Uzbek authorities cannot be relied upon in case of need.
Upside for TB and IY could stem from an improvement of Uzbekistan's operating environment, including successful completion of the banking reform, further progress in enhancing supervision and continued macro-economic stability in the country, if they maintain reasonable and stable financial profile metrics.
Upgrade of UB requires material improvements in the bank's underwriting standards and risk controls translating into stronger asset quality and higher profitability.
The banks' VRs and, consequently, IDRs could be downgraded in case of notable deterioration of the asset quality, impacting profitability, unless compensated by fresh capital injections from shareholders. A downgrade of TB's ratings could also stem from weakening of the business relationship between the bank and UzEx, resulting in lower stability of the latter's accounts with TB. UB's IDRs could be downgraded if corporate governance weaknesses result in marked weakening of the bank's financial metrics.
Fitch does not anticipate changes to the Support Ratings and Support Rating Floors due to limited systemic importance of these three banks.
Joint Stock Innovation Commercial Bank Ipak Yuli: Long Term Issuer Default Rating; affirmed at “B” ; Local Currency Long Term Issuer Default Rating affirmed at “B”; Short Term Issuer Default Rating Affirmed at “B”; Local Currency Short Term Issuer Default Rating affirmed at “B”; Viability Rating Affirmed at “b”; Support Rating Affirmed at “5”; Support Rating Floor affirmed at “NF”.
Private Joint Stock Bank Trustbank: Long Term Issuer Default Rating affirmed at “B”; Local Currency Long Term Issuer Default Rating affirmed at “B”; Short Term Issuer Default Rating affirmed at “B”; Local Currency Short Term Issuer Default Rating affirmed at “B”; Viability Rating affirmed at “b”; Support Rating affirmed at “5”; Support Rating Floor affirmed at “NF”.
Joint Stock Commercial Bank Universal Bank: Long Term Issuer Default Rating affirmed at “B-”; Local Currency Long Term Issuer Default Rating affirmed at “B-”; Short Term Issuer Default Rating affirmed at “B”; Local Currency Short Term Issuer Default Rating affirmed at “B”; Viability Rating affirmed at “b-”; Support Rating affirmed at “5”; Support Rating Floor affirmed at “NF”
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