Fitch Ratings has maintained a neutral outlook for the banking sector of the CIS+ region countries (Azerbaijan, Armenia, Georgia, Kazakhstan, Ukraine, and Uzbekistan) until 2026, APA-Economics reports, citing the rating agency’s report.
According to the report, key creditworthiness factors and sectoral average indicators are expected to remain stable. The agency states that a stable operating environment and a high pace of lending support the stability of the sector. Although there is an extremely difficult operating environment in Ukraine, the country’s banking sector outlook remains neutral, and no significant deterioration is expected.
Fitch analysts note that economic growth in the CIS+ region will remain sustainable against the backdrop of strong domestic demand and favorable raw material market conditions for oil-exporting countries.
According to the report, retail lending ensures a double-digit growth rate of the loan portfolio, but regulatory measures limit excessive expansion and particularly reduce the risks of overactivity in Kazakhstan and Uzbekistan. The contagion rate of lending remains low or moderate in most countries, which provides opportunities for further sector expansion.
Fitch expects only minor fluctuations in asset quality. This is associated with a reduction in legacy risks and the gradual decline of loan dollarization in many markets. The agency notes that pressure on asset quality remains in Uzbekistan. Sector profitability continues to be high due to healthy interest margins and moderate reserve allocations. Having sufficient capital and liquidity buffers allows banks to maintain or increase dividends without compromising stability. The indicators of the Ukrainian banking sector are also supported by effective regulation, sustained liquidity, and adequate capital reserves.
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