Fitch Expects Stable Financial Performance of Uzbekistan’s Banks in 2026

Tashkent, Uzbekistan (UzDaily.com) — Fitch Ratings expects the financial performance of Uzbekistan’s banking sector to remain stable in 2026 amid continued economic growth, according to the agency’s latest analytical report.

Under Fitch’s base-case scenario, the banking system will continue to see an increase in non-performing loans, putting some pressure on profitability. However, expected government support — particularly for state-owned banks — should strengthen capital buffers and reinforce the sector’s overall resilience.

The agency also notes that ongoing reforms will gradually improve the operational efficiency of financial institutions.

Privatization is highlighted as a key focus area. Fitch expects the government to present a targeted strategy in 2026 for the sale of state-owned stakes in several banks, including the largest, Uzpromstroybank. Prospects for privatizing other state-owned banks are viewed as more long-term.

Fitch also forecasts strong growth in the deposit market, with volumes expected to rise by 20–25% in 2026. This trend will be driven by higher real household incomes, a shrinking shadow economy, and further digitalization of banking services.

Banks are expected to continue actively attracting external borrowing due to the limited supply of long-term funding in the national currency. According to Fitch, state-owned and major private banks are likely to increase eurobond issuances, supported by favorable market conditions.

In a broader regional context, Fitch maintains a neutral outlook for the CIS+ banking sector — which includes Armenia, Azerbaijan, Georgia, Kazakhstan, Ukraine, and Uzbekistan — through 2026. Stability is supported by resilient operating environments, strong domestic demand, favorable commodity prices in export-oriented economies, and double-digit retail lending growth. Regulatory measures in Kazakhstan and Uzbekistan are helping prevent overheating in credit markets.

Asset quality is expected to stay within acceptable levels thanks to the declining share of legacy non-performing loans and lower dollarization, though moderate pressure on loan portfolios will remain in Uzbekistan.

Bank profitability across the region should stay strong due to solid net interest margins and manageable provisioning levels. Capital and liquidity buffers are sufficient to sustain dividend policies without jeopardizing stability.

Key risks cited by Fitch include potential external shocks, the impact of sanctions related to Russia, and volatility in global commodity markets. Despite these risks, Fitch believes the region’s banking systems will remain resilient, and while ratings are generally below investment grade due to structural and country-specific risks, most carry stable outlooks.