S&P affirms ratings of Uzbekistan’s National Bank at 'BB- / B'
BAKU, Azerbaijan, Dec. 24
By Fakhri Vakilov - Trend:
Standard and Poor’s (S&P) Global Ratings has affirmed its 'BB-/B' long- and short-term issuer credit ratings on National Bank for Foreign Economic Activity of Uzbekistan (NBU); the outlook remains stable, Trend reports citing S&P.
NBU will be reorganized into a joint-stock company and transfer part of its state-driven loans to Uzbekistan Reconstruction and Development Fund.
The bank will also receive additional capital from the government by year-end 2019, which will mean its capitalization materially improves.
“The stable outlook reflects our view that ongoing state support over the next 12 months largely balances high economic and industry risks in Uzbekistan's banking sector,” S&P reported.
The affirmation reflects S&P’s expectation that the bank will remain the largest financial institution in Uzbekistan, maintaining its dominance in government-related and commercial lending, as well as in systemwide customer deposits.
“Based on the bank's increasing capitalization, we now assess the stand-along credit profile (SACP) at 'bb'. However, we think that the bank's creditworthiness is closely linked to the situation in the Uzbek economy where it operates and to the creditworthiness of the government,” S&P stated.
S&P therefore cap the long-term rating at the level of the sovereign credit rating. Materially higher problem assets and credit losses may lead to a decrease in the SACP score, but it is unlikely to lead to a decrease in the bank's ratings, the report said.
The stable outlook on NBU reflects S&P’s view that ongoing state support over the next 12 months largely balances high economic and industry risks in Uzbekistan's banking sector.
“We are unlikely to raise the ratings over the next 12 months unless our view of the sovereign's creditworthiness improves,” reads the message.
S&P could downgrade NBU over the next 12 months if the sovereign's creditworthiness deteriorates materially.
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