BAKU, Azerbaijan, May 19
By Klavdiya Romakayeva - Trend:
Fitch Ratings has affirmed the National Bank for Foreign Economic Affairs of Uzbekistan (NBU) Long-term Issuer Default Ratings (IDRs) at 'BB-' with a Stable Outlook and a 'b' Viability Rating, Trend reports referring to Fitch Ratings.
It is noted that the confirmation of the NBU IDR reflects Fitch's view of the moderate likelihood of support from the Uzbek government if needed, as indicated by the bank's '3' support rating and 'BB-' Long-term IDR support.
According to the information, the NBU was not included in the list of state banks, which the government of Uzbekistan intends to privatize by the end of 2025 in accordance with the medium-term strategy for the development of banking system, published in 2020.
Fitch believes that the NBU will maintain its important role within the current policy while expanding its retail and corporate client base.
At the same time, the authorities' ability to provide support is underpinned by the moderate size of the banking sector relative to the overall size of the economy (total assets accounted for 63 percent of GDP at the end of 2020) and large international reserves ($35 billion at the end of 2020).
Also, when assessing the ability to provide support, the high level of concentration in the banking sector is also taken into account (state-owned banks accounted for 85 percent of the sector's assets at the end of Q1 2021), high dollarization of loans (50 percent at the end of Q1 2021), a high share of external funding in the banking sector and vulnerability to external shocks in a volatile operating environment since public finances depend on the export of commodities and remittances from Uzbek citizens working abroad.
In addition, Fitch noted that the NBU's senior unsecured debt rating is on par with its Long-term IDRs.
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