S&P Global Ratings affirmed its “B+/B” long- and short-term counterparty credit ratings on Ipoteka Bank JSCM. The outlook is stable.
The affirmation reflects S&P’s view that over the past two months Ipoteka Bank’s capitalization has significantly improved on the back of support received from the government of about Uzbekistani sum (UZS) 380.8 billion (about $95 million) and the bank is now in compliance with the minimum capital regulatory requirement of 12.5%.
S&P expects that the government support will counterbalance pressures on the bank’s capitalization stemming from high asset growth and ongoing devaluation of the Uzbekistani sum.
At the same time, over the past five years, Ipoteka Bank’s average annual asset growth was about 38%, higher than the sector average of 25-30%, driven by strong growth in corporate lending partly aimed at supporting strategic economic sectors in Uzbekistan.
In S&P’s view, internal capital generation remains weak and additional capital injections remain crucial to support aggressive asset growth.
The stable outlook reflects S&P’s view that capital provided by the government to date and additional capital expected in 2017-2018 as well as ongoing funding support will support Ipoteka Bank’s creditworthiness at the current level in the next 12-18 months.
“We could lower the ratings if the bank expands significantly stronger than we currently expect, with the growth not being supported by additional capital provided by the government,” S&P said.
A positive rating action is currently unlikely.
Ipoteka Bank was established in April 2005 through the merger of Uzbek Housing-Savings Bank (Uzjilsberbank) and State Joint Stock Mortgage Bank Zamin. (Trend/Business World Magazine)