BAKU, Azerbaijan, September 22. Fitch Ratings
has upgraded Uzbekistan’s Ipak Yuli Bank’s Long-Term Foreign- and
Local-Currency Issuer Default Ratings (IDRs) to ‘B+’ from ‘B’, with
Stable Outlooks, citing improvements in the domestic banking
environment, sound profitability, reasonable asset quality and
adequate liquidity buffers.


This was reflected in the statement by Fitch Ratings.


Fitch also upgraded the bank’s Viability Rating (VR) to ‘b+’
from ‘b’. The agency said the higher ratings reflect progress in
Uzbekistan’s banking-sector reforms, particularly stronger
regulation and efforts to address legacy risks, alongside robust
economic growth. Uzbekistan’s economy expanded at an annualized
8.5% in the first half of 2026, according to Fitch.


Ipak Yuli remains a relatively small privately owned bank,
accounting for 3% of Uzbekistan’s banking-sector assets at the end
of 1H26. Its business is concentrated on corporate and small and
medium-sized enterprise lending, which represented 79% of gross
loans at the end of the first half.


According to Trend’s calculations, the bank’s loan portfolio grew
at an average annual rate of 26% in 2023-2025, compared with 21%
for the Uzbek banking sector. This means Ipak Yuli’s loan growth
exceeded the sector average by 5 percentage points, or was
approximately 24% faster on a relative basis.


Fitch highlighted loan dollarization as a key characteristic of
the bank’s balance sheet. Foreign-currency loans accounted for 49%
of gross loans at end-1H26, compared with 39% for the sector. The
difference of 10 percentage points indicates a comparatively higher
exposure to foreign-currency lending.







Asset-quality indicators remained relatively stable. Stage 3
impaired loans declined to 2.9% of gross loans at end-2025, from
3.7% a year earlier, while total loan-loss allowances covered 80%
of impaired loans. Stage 2 loans stood at 8.7%. Fitch expects the
impaired-loan ratio to remain below 5% in 2026-2027.


The decline in the Stage 3 ratio from 3.7% to 2.9% represents a
0.8-percentage-point improvement, or about a 21.6% reduction in the
ratio. At the same time, the 80% coverage ratio means that
allowances were equivalent to four-fifths of the bank’s impaired
loans at end-2025.


Capitalization also strengthened. Ipak Yuli’s Fitch Core Capital
ratio increased to 15.2% at end-2025, from 14.1% a year earlier,
while its regulatory Tier 1 capital ratio reached 15.6% at
end-1H26, comfortably above the 10% regulatory threshold.


Wholesale funding represented 37% of total liabilities at
end-2025, while highly liquid assets accounted for 37% of total
assets. The loans-to-deposits ratio stood at 112%, reflecting the
bank’s reliance on funding sources beyond customer deposits.


Fitch said that a sustained decline in the FCC ratio below 12%,
funding instability, or liquidity pressures could result in
negative rating action. Conversely, further improvement would
require a stronger assessment of Uzbekistan’s banking operating
environment and a reduction in the bank’s risk appetite while
maintaining adequate profitability and capitalization.