BAKU, Azerbaijan, June 19. Fitch Ratings has
revised the outlooks on seven major state-owned banks in Uzbekistan
to Positive from Stable, citing an improved capacity of the
government to support the country's banking sector, while affirming
their existing credit ratings, Trend reports via Fitch Ratings.


The rating agency affirmed the Long-Term Foreign- and
Local-Currency Issuer Default Ratings (IDRs) of six banks — the
National Bank for Foreign Economic Activity of Uzbekistan (NBU),
Agrobank, Xalq Bank, Business Development Bank (BDB), Aloqabank,
and Microcreditbank (MCB) — at 'BB'. Turonbank's long-term ratings
were affirmed at 'BB-'.


Fitch said the outlook revision follows its June 3 decision to
revise Uzbekistan’s sovereign outlook to Positive while affirming
the country’s sovereign rating at 'BB'.


"The revision reflects Fitch’s view of an improved ability of
the Uzbek authorities to provide support to domestic state-owned
banks," the agency said.


According to Fitch, the ratings of most of the banks are closely
linked to Uzbekistan’s sovereign credit profile due to majority
state ownership, a strong history of government capital and funding
support, and their strategic roles in financing key sectors of the
economy and government-backed social programs.


NBU and Agrobank remain among the country’s most strategically
important lenders, while Xalq Bank, Business Development Bank,
Aloqabank, and Microcreditbank play significant roles in
implementing social and development initiatives. Fitch also
highlighted NBU’s systemic importance to the national banking
system.


Turonbank’s rating remains one notch below the sovereign rating
because of its relatively small size, limited systemic importance,
and lack of a clearly defined policy role.


The agency noted that government plans to privatize Aloqabank
and Turonbank by 2030 have not altered its support assumptions.
Fitch does not expect major state-bank privatizations to occur
before 2027 and said the transformation required to prepare the
banks for sale could take several years.







In Aloqabank’s case, Fitch suggested privatization may become
even less likely after the bank assumed a new policy role in
2025.


"We believe the bank’s privatization plans could ultimately be
canceled," Fitch said regarding Aloqabank.


Fitch also affirmed the banks’ short-term issuer default ratings
at 'B', while maintaining ratings on senior unsecured debt issued
by NBU, Agrobank, and Aloqabank in line with their long-term issuer
ratings.


Looking ahead, Fitch said the banks’ ratings could be upgraded
if Uzbekistan’s sovereign rating is raised and government support
remains strong. Conversely, any downgrade of the sovereign rating
or weakening of state support could result in negative rating
actions for the banks.


The agency also pointed to governance-related risks across the
state-owned banking sector, noting significant government
involvement in board oversight, business operations, and strategic
decision-making. These governance factors continue to weigh on the
banks’ credit profiles.


Despite those concerns, Fitch’s latest action signals growing
confidence in Uzbekistan’s economic outlook and the government’s
ability to back its strategically important financial institutions
as the country continues its broader economic reform agenda.