Fitch assigns BB rating to Uzbekistan Mortgage Refinancing Company

Tashkent, Uzbekistan (UzDaily.uz) — Fitch Ratings has published the long-term issuer default ratings of JSC Uzbekistan Mortgage Refinancing Company (UzMRC) in foreign and local currencies at BB. The outlook on the ratings is positive, which matches the outlook on the sovereign rating of Uzbekistan.

Direct link to the sovereign rating. The ratings of UzMRC and the Government Support Rating (GSR) at bb are directly linked to the sovereign rating of Uzbekistan.

This assessment is based on a high probability of direct financial support from the state in case of need.

This conclusion is backed by a number of factors: the state's ownership stake in the company stands at 90% (directly and indirectly); the government has repeatedly provided support through capital injections and sovereign funding (comprising about 60% of funding); the company's bonds possess a quasi-sovereign status on the domestic market; and finally, UzMRC is the sole mortgage refinancing institution in the country.

When assessing the state's propensity to provide support, Fitch also takes into account the relatively low cost of such support compared to the country's reserves and the reputational risks for the state in the event of a UzMRC default.

Conservative business model with limited risks. The company facilitates the development of the mortgage market in Uzbekistan by refinancing residential mortgage loans issued by local banks. The business model implies limited credit and market risks. At the same time, the moderate absolute size of the company constrains its Standalone Credit Assessment (SCA) at b.

Market share growth in an expanding market. The company has been operating since the end of 2020 with the technical and financial support of the Asian Development Bank (ADB; rated AAA/stable). The market share of UzMRC grew from 5.3% at the end of 2023 to 8.3% at the end of the first quarter of 2026: in 2025, the company refinanced 11% of all residential mortgage loans issued in Uzbekistan. Fitch forecasts the company's assets to grow by approximately 30% per year in 2026–2027 amid the steady growth of the domestic mortgage market.

Conservative underwriting mitigates risks. UzMRC refinances prime mortgage loans with a maximum loan-to-value ratio of 75% and a maximum debt-to-income ratio of the borrower at 50% of verified income. Partner banks are required to replace non-performing loans with performing ones and maintain collateral at a level of at least 115% of the refinanced debt. According to the agency, this effectively mitigates the risk of concentration on partner banks, which is inherent in the company's business model.

Exposure to Uzbekistani banks. As of the end of 2025, about 80% of UzMRC's assets consisted of loans to commercial banks secured by granular residential mortgage portfolios; the remainder fell predominantly on sovereign securities and deposits in large banks. Most positions correspond to a BB level credit profile.

There are no non-performing loans on the company's balance sheet: banks promptly replace overdue loans with performing mortgages, which also reduces the seasoning risk of the portfolio under conditions of its rapid growth.

Modest margin with low costs. UzMRC does not pursue the goal of maximizing profit. The net interest margin in 2025 was around 4%; the cost of risk was 0.3% of the average portfolio; and the cost-to-income ratio was 15%. The pre-tax return on assets was 3.4%, which the agency regards as sufficient profitability.

State support ensures growth. From the end of 2021 to the end of 2025, the company's capital base grew 14 times — mainly due to state injections into equity capital. Presidential decrees provide for further capital expansion: doubling in 2026 and a fourfold growth by 2030 relative to the level at the end of 2025. Fitch expects that ongoing injections will ensure sustainable rapid growth, while capitalization and leverage metrics will remain sufficient, although they may exhibit volatility. At the end of 2025, the regulatory capital adequacy ratio was 190% (compared to 184% a year earlier), and the debt-to-tangible equity ratio improved to 3.7x (from 4.2x).

Reliable access to funding. The quasi-sovereign status of UzMRC bonds provides the company with a privileged position on the domestic debt market: the securities have preferential risk weights (around 20% versus the standard 100%), are exempt from taxes, and are accepted by the Central Bank of Uzbekistan as collateral for REPO operations. Thanks to this, the company is one of the largest corporate issuers in the country — accounting for 27% of the volume of outstanding corporate bonds as of the end of the first quarter of 2026.

An additional source of financing is loans from international financial institutions, a significant part of which is backed by sovereign guarantees.

A negative rating action could follow in the event of a downgrade of the sovereign rating of Uzbekistan; a substantial reduction in the share of refinanced mortgage loans, indicating a weakening of the political role of the company; a significant increase in external unhedged foreign currency debt without state guarantees; or a sharp deterioration in underwriting or capitalization standards (in particular, the debt-to-tangible equity ratio exceeding 7x).

A positive rating action, conversely, is likely if the sovereign rating of Uzbekistan is upgraded, as well as with a significant increase in the scale of business while maintaining control over leverage and sufficient regulatory capital buffers.