Fitch Affirms Universal Bank’s ‘B-’ Rating with a Stable Outlook

Tashkent, Uzbekistan (UzDaily.com) — Fitch Ratings has affirmed the Long-Term Issuer Default Rating (IDR) of Universal Bank at ‘B-’ with a Stable Outlook, the agency reported. The bank’s Viability Rating (VR) was also affirmed at ‘b-’.

According to Fitch, the rating reflects the bank’s standalone credit profile, taking into account its small scale of operations, limited market share, and high loan portfolio concentration, including related-party exposures.

At the same time, Universal Bank shows moderate levels of problem loans, strong profitability, and sufficient capital and liquidity to meet its obligations.

The bank remains a small player in Uzbekistan’s banking sector, accounting for less than 1% of total assets, with a focus on SME financing and retail lending.

Fitch also highlighted the bank’s moderate dollarization — 18% of loans at the end of the first half of 2025 compared with 42% for the sector overall — and an increase in related-party lending from 3% in 2023 to 10% in 2024, which may understate the true exposure.

The bank’s asset quality is assessed as moderate, with Stage 3 loans (IFRS) at 2% as of end-2024, fully covered by reserves. Fitch expects this ratio to rise to around 4% over the next two years but remain manageable.

Universal Bank maintains strong profitability, driven by high commission income (57% of operating revenue in 2024), resulting in a return on average equity (ROAE) of 27%. Capitalization remains adequate, with Core Capital at 16.8% at end-2024, above the regulatory minimum. The bank’s liquidity position is solid, with about 30% of assets held in liquid instruments, covering nearly half of total deposits.

Fitch emphasized that the bank’s rating is sensitive to asset-quality deterioration, profitability declines, or a rise in credit losses.

An upgrade potential exists if corporate governance improves, related-party lending decreases, and the operating environment in Uzbekistan strengthens.