Moody’s Affirms Aloqabank B1 Rating With Stable Outlook

Tashkent, Uzbekistan (UzDaily.com) — Moody’s Ratings has affirmed the long-term foreign and local currency deposit ratings of Uzbekistan’s Aloqabank at B1. The outlook on all ratings remains stable. The agency also affirmed the bank’s Baseline Credit Assessment at b2, its short-term deposit ratings at Not Prime, and its Counterparty Risk Ratings at Ba3/NP.

Moody’s said the affirmation reflects expectations of continued state support for the bank, including potential capital injections and liquidity assistance. According to the agency, these measures are expected to offset pressure on Aloqabank’s standalone credit profile over the next 12 to 18 months.

The agency noted that in 2025 the bank faced weaker profitability amid rapid asset growth.

Aloqabank’s total assets increased by 38%, while its loan portfolio grew by 46%, putting pressure on capital adequacy. The bank also reported a net loss, largely driven by a one-off accounting impact under IFRS 9 linked to interbank operations conducted at below-market rates.

Moody’s said that excluding this one-off factor, the bank’s operating performance remained positive, supported by growth in interest and fee income. However, asset quality indicators weakened during 2025. The share of non-performing loans declined slightly to 7.2% from 7.5% a year earlier, but their absolute volume increased, while coverage by reserves fell to about 36% from 42%.

Capitalization metrics also weakened, with the tangible common equity ratio declining to about 10% from 12.6% a year earlier. Moody’s expects the bank’s capital position to strengthen in 2026 following a planned Tier 1 capital injection by the government, which should partially offset the impact of rapid asset expansion.

The agency also pointed to changes in Aloqabank’s funding structure in 2025, including a higher share of borrowings, market funding, and subordinated state-provided debt, alongside growth in customer deposits.

Moody’s said the B1 rating includes a one-notch uplift above the bank’s Baseline Credit Assessment, reflecting a high likelihood of government support. This is underpinned by the state’s controlling stake of more than 80% and the bank’s key role in state-directed lending programs.

The stable outlook reflects a balance between ongoing government support and continued pressure on profitability and capital due to fast asset growth and limited internal capital generation.

An upgrade could be considered if there is sustained improvement in asset quality, profitability, and capitalization, as well as a stronger operating environment in Uzbekistan’s banking sector.

A downgrade could occur if financial performance deteriorates or if the likelihood of government support weakens, though Moody’s does not currently expect such a scenario.