Fitch Affirms Agrobank at 'BB' with Positive Outlook

Tashkent, Uzbekistan (UzDaily.com) — International rating agency Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDRs) of one of Uzbekistan's largest systemically important financial institutions, Joint-Stock Commercial Bank Agrobank, in both foreign and national currencies at 'BB' with a sustained Positive Outlook.

This rating action is directly driven by the sovereign credit profile of the Republic of Uzbekistan, as the bank's final credit assessments remain fully equalized with those of the state. The agency's experts have maintained the bank's Government Support Rating (GSR) at a stable 'bb', reflecting a near-guaranteed willingness and capacity of the authorities to deliver prompt operational assistance if required. Concurrently, Agrobank’s standalone creditworthiness, represented by its Viability Rating (VR), was affirmed at 'b-'.

The internal credit profile of the financial institution reflects both the broader dynamics of the Uzbek operating environment and the bank's deep integration into state-directed economic agendas. According to Fitch analysts, Agrobank's dominant market franchise and strong capitalization levels are counterbalanced by structural asset-quality risks, structurally compressed profitability, and tight liquidity thresholds.

Agrobank retains its critical position as a prime fiscal agent for the government, deploying subsidized and preferential financing to core economic pillars, specifically the agro-industrial complex and the textile industry. As of May 1, 2026, the institution consolidated 12% of total banking sector assets and approximately 14% of the entire loan portfolio within the country's financial system. State-subsidized loans constituted 41% of the bank's aggregate loan book at the close of the first quarter of 2026.

Fitch notes a phase of aggressive credit expansion: in 2025, loan growth calculated under IFRS accelerated to 30%, up from 15% the previous year, substantially outpacing the broader sector's average benchmarks.

The baseline quality of the bank's loan book remains highly sensitive to macroeconomic shifts. The share of impaired loans stabilized at roughly 6% at the end of 2025, with defaults and payment delays heavily concentrated within the large corporate and small-to-medium enterprise (SME) segments. The balance sheet safety cushion is rated as moderate, with the provisioning coverage ratio for non-performing loans (NPLs) standing at 51%, leaving the institution reliant on physical collateral.

Profitability indicators continue to display compressed dynamics. Driven by escalating wholesale funding costs, the bank's net interest margin narrowed from 7% down to 6% over the course of 2025. Final net income also faced persistent pressure from hefty operational overheads and continuous impairment charges. Moving forward, Fitch anticipates a mild recovery in operating margins over the medium term, supported by the strategic rollout of higher-yielding, commercial retail products.

The structural stability of Agrobank’s balance sheet has traditionally been anchored by unprecedented capital injections from the state. Throughout the five-year period stretching from 2021 to 2025, the government funneled 7.5 trillion сумов into the bank's equity, a sum equivalent to roughly 8% of its risk-weighted assets (RWA). This massive support successfully preserved the Fitch Core Capital ratio at a comfortable level just under 14% at the end of 2025, compared to 15% in 2024.

The liability mix remains diversified but highly sensitive to international capital market developments: 45% of total passives are composed of external market borrowings, including Eurobond issuances and dedicated credit lines from international financial institutions (IFIs). Direct government funding and state funds make up another 30%. On a positive note, a steady influx of private retail customer accounts pushed the share of non-state deposits up to 23% of total liabilities.

Regarding Environmental, Social, and Governance (ESG) criteria, Fitch highlighted elevated environmental risk exposures stemming from the heavy focus on agricultural portfolios, alongside tight state control over senior executive management. However, the direct impact of these parameters on the bank's long-term ratings is currently viewed as limited.