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.
