BAKU, Azerbaijan, December 2. Fitch Ratings maintains a neutral sector outlook for banks in the CIS+ region (Armenia, Azerbaijan, Georgia, Kazakhstan, Ukraine, and Uzbekistan) through 2026, Trend reports via the rating agency.
"We expect core credit drivers and sector-average metrics to
remain mostly stable, supported by resilient operating environments
and robust loan growth. While operating conditions remain extremely
challenging in Ukraine, the sector outlook is also neutral and
significant deterioration is not likely," reads the report.
Fitch analysts believe that economic growth in the CIS+ region will
mostly remain solid, underpinned by strong domestic demand, and
commodity prices benefitting oil exporters.
"Retail lending is driving double-digit loan growth, while
regulatory measures are moderating expansion and curbing risks of
overheating, especially in Kazakhstan and Uzbekistan. Credit
penetration remains low or, in the cases of Georgia and Armenia,
moderate, which will provide space for further sector growth. Asset
quality metrics are likely to show only limited fluctuations, with
declining legacy risks and a gradual reduction in loan
dollarisation across most markets, though Uzbekistan still faces
some asset quality pressures. Profitability remains strong,
supported by healthy net interest margins and moderate or low
impairment charges. Capital and liquidity buffers are robust,
allowing banks to maintain or increase dividend payouts without
jeopardising sector stability. Ukraine’s banking sector performance
is backed by sound regulatory oversight, with resilient liquidity,
and capital buffers," the report says.
Fitch notes that key risks for CIS+ banks include potential
external shocks and spillovers from Russia-related sanctions and
commodity price volatility, but Fitch expects sectors’ resilience
to persist. "Most bank ratings remain sub-investment-grade due to
structural challenges and sovereign or country risk constraints,
but rating Outlooks are predominantly Stable."