Baku, Azerbaijan, Jan. 17
Trend:
Following a recent review of the Banking Industry Country Risk Assessment (BICRA) for Uzbekistan, S&P Global Ratings revised its economic risk assessment to ‘7’ from ‘8’, Trend reports referring to UzDaily.
The agency has revised its BICRA score for Uzbekistan to group ‘8’ from group ‘9’. The ratings on 12 rated banks in the country remain unchanged.
The Uzbek government’s strong fiscal and external positions support the ‘BB-/B’ long- and short-term foreign and local currency sovereign credit ratings on the country. These strengths predominately arise from the government’s large asset position, which, together with relatively low government debt, gives Uzbekistan additional flexibility to manage potential stresses in the economy and provide support to state-owned enterprises or the banking sector, if necessary.
The economy remains in an expansionary phase with projected real economic growth of 5.0%, on average, through 2021.
“Nevertheless, we view economic imbalances as currently modest. We think that the lower imbalances compared with regional peers such as Kazakhstan and Russia reflect the Uzbekistani government’s much higher involvement in increasing lending, the banks’ lower exposure to the real estate market, much lower mortgage lending as a percentage of systemwide loans, and underdeveloped commercial real estate and equity markets.”
“We have also noted very modest real price increases for residential real estate in the country over the past four years, stemming from widespread state-led construction, undeveloped mortgage lending, and low housing affordability. Consequently, we currently see limited risk of asset bubbles elsewhere in the economy. We have therefore revised our economic risk assessment for Uzbekistan to ‘7’ from ‘8’ and we now classify the banking sector of the country in group ‘8’ under our BICRA, together with Russia, Georgia, Armenia, and Argentina,” the agency said.