BAKU, Azerbaijan, June 24. Fitch Ratings agency has affirmed Joint-Stock Commercial Mortgage Bank Ipoteka-Bank's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'BB-', Trend reports.
According to the agency, the rating's outlook has been affirmed as Stable.
Ipoteka's Long-Term IDRs are based on potential support from the bank's new majority shareholder Hungarian OTP Bank Plc., which acquired 73.7 percent of Ipoteka's common shares from the government of Uzbekistan in June 2023.
Besides, according to the agency, its view on OTP's ability and propensity to support Ipoteka reflects its majority ownership, the strategic importance of Uzbekistan's market for the group as well as the low cost of potential support given Ipoteka's small size relative to the parent bank (4.5 percent of its total assets at the first half of 2022).
"The bank's SSR and Long-Term Foreign-Currency IDR are constrained by Uzbekistan's 'BB-' Country Ceiling, which captures transfer and convertibility risks and the risk that the subsidiary may not be able to benefit from parent support to service its own foreign-currency obligations," the agency noted.
Despite recent market reforms and privatization plans, Uzbekistan's economy remains heavily dominated by the state resulting in weak governance and generally poor financial transparency, the agency also said, adding that sector risks stem from high dollarization, significant exposure to long-term project finance and reliance on external debt.
The agency further pointed out that Ipoteka-Bank is the fifth-largest bank in Uzbekistan with leading positions in the mortgage market (25 percent of sector mortgages at the end of the first quarter of this year), and that in preparation for privatization, the bank has focused on commercial lending.
"We expect further material improvements in management and governance quality under the new shareholder, which should be beneficial for the bank's business profile in the medium term," the agency concluded.
Ipoteka-Bank is a 94 percent state-owned bank, which was founded in 1996. It's fully involved in policy reforms and state development programs in Uzbekistan. At the same time, the bank is universal and carries out various activities such as retail business, investment activities, and project financing.
