BAKU, Azerbaijan, September 11. S&P Global Ratings has raised the long-term issuer credit rating of Uzbekistan’s Davr-Bank to ‘B+’ from ‘B’ following its acquisition by Azerbaijan’s ABB, while affirming the bank’s short-term rating at ‘B’. The outlook is stable.
“We raised our ratings on Davr-Bank because we consider it a moderately strategic subsidiary of the International Bank of Azerbaijan (ABB),” S&P Global Ratings said.
According to the agency, Davr-Bank accounts for 10%-12% of ABB Group’s total assets. The transaction is in line with ABB’s long-term strategy of international expansion and positioning itself as a regional player.
Davr-Bank is expected to be renamed ABB Davr-Bank.
“However, the level of operational integration between the two entities is yet to be determined, limiting our assessment. We believe ABB Group has higher creditworthiness than Davr-Bank stand-alone and therefore incorporate a notch of uplift into our rating on Davr-Bank,” the agency said.
S&P Global Ratings expects Davr-Bank to maintain its focus on retail and small and midsize enterprise (SME) lending over the next 12 months.
“While we anticipate the bank to develop its new growth strategy before the end of 2026, we expect these segments to remain its core pillars and to continue to fuel growth,” the agency said.
S&P Global Ratings also expects Davr-Bank to benefit from new opportunities arising from its membership in the ABB Group, including servicing Azerbaijani and Turkish corporates in Uzbekistan and integrating ABB’s international money transfer services.
The agency projects Davr-Bank’s loan book to grow by 20%-25% in 2026, accelerating to 30%-35% in both 2027 and 2028.
“We forecast the bank's net interest margin to remain robust at 10.0%-10.3%, bolstered by high interest rates and an expanded footprint in higher-margin segments,” S&P Global Ratings said.
The agency expects Davr-Bank to maintain adequate capital buffers. Under its base-case scenario, S&P Global Ratings does not anticipate capital injections from shareholders over 2026-2028.
The agency expects the bank’s risk-adjusted capital (RAC) ratio to remain at 10.0%-10.7% over the next 12-18 months, supported by solid earnings and 100% net income retention.
At the same time, integration with ABB could result in changes in loan reclassification and higher provisioning needs. Changes in ownership could also lead to adjustments to strategic plans, potentially creating execution risks and affecting dividend policy.
“This, in turn, could affect capital buildup and bring the RAC ratio to below 10% over the next two-to-three years. This constrains our assessment of Davr-Bank’s capital position at adequate, although we expect capitalization will remain a rating strength,” the agency said.
The stable outlook reflects S&P Global Ratings’ expectation that Davr-Bank will maintain its focus on retail and SME lending over the next 12 months while benefiting from its business connection with ABB, supported by solid capital buffers and adequate asset quality.
The agency also expects the bank’s liquidity position to remain adequate and Davr-Bank to maintain access to funding from international financial institutions.
The International Bank of Azerbaijan (ABB) has acquired a 51% controlling stake in Uzbekistan’s Davr Bank for about 1.65 trillion soums ($140 million), implying an equity valuation of roughly $280 million for the Uzbek lender.
The transaction was executed on September 10 through six consecutive trades on the Tashkent Republican Stock Exchange. ABB purchased 51 million ordinary shares at a single price of 32,281.28 soums (about $2,74) per share.
