TASHKENT, Uzbekistan, July 14. Fitch Ratings has affirmed the Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) of Uzbekistan's joint-stock commercial bank, Qishloq Qurilish Bank (QQB), at 'BB-' with Stable Outlooks, Trend reports.
However, as the report noted, the bank's Viability Rating (VR) has been downgraded from 'b' to 'b-'.
The affirmation of QQB's Long-Term IDRs reflects Fitch's belief in a moderate likelihood of government support from Uzbekistan, as indicated by its 'bb-' Government Support Rating (GSR). The downgrade in VR is a result of significant deterioration in the bank's asset quality, leading to loss-making performance in 2022, as well as high capital encumbrance.
QQB's IDRs take into account its majority state ownership, moderate systemic importance, and the relatively low cost of potential support compared to the country's international reserves. While QQB is targeted for privatization by the end of 2025, Fitch expects the actual sale to take longer due to ongoing changes in the bank's business model. State support is expected to be available until privatization occurs.
As Fitch pointed out, Uzbekistan's economy is still largely controlled by the state, despite recent market reforms and privatization plans, resulting in weak governance and limited financial transparency. Risks in the sector arise from a high level of dollarization, significant exposure to long-term project finance, and reliance on external debt.