Fitch Ratings assesses the preliminary results of reforms in Uzbekistan’s banking and insurance sectors and provides its view on what to expect in 2026
Last year was marked by positive rating actions regarding Uzbekistan. In June 2025, Fitch Ratings upgraded the sovereign rating of the Republic of Uzbekistan to “BB” with a stable outlook. Shortly afterwards, the agency revised the outlook for the operating environment for Uzbek banks from “stable” to “positive.” A similar action was taken regarding the outlook for the insurance sector’s industry profile and operating environment. We will explain the key factors underpinning these rating actions and present our view on the short-term prospects for both sectors.
Reforms Gain Momentum
A wide-reaching programme of economic reform, initiated by the Government of the Republic of Uzbekistan in 2017, has already brought about tangible positive results. A key pillar of this reform agenda has been the large-scale banking sector reform being implemented since 2020. It includes the privatisation of most state-owned banks and the transformation of business models of the banks that will remain in strategic government ownership — with assistance from international development institutions.
The sale of a controlling stake in Ipoteka-Bank to Hungary’s OTP Group in 2023 became the first successful transaction under the privatisation programme. Other banks targeted for sale have taken considerable efforts to improve the quality of management and corporate governance, increase transparency of their business operations, and shift to commercially oriented business models. We also note the gradual reduction in the volume of higher-risk subsidised lending by state-owned banks. Such lending programmes have become more targeted and loan terms are now more aligned with market terms than before.
An important development for the insurance sector was the government’s adoption in 2024 of a programme for comprehensive sector transformation. The programme includes mandatory registration of all contracts through a Unified Automated Information System, elimination of paper-only policy issuance and integration with government agency systems, which will support further growth in mandatory insurance coverage. The programme also provides for alignment of the methodology for forming insurance reserves and determining solvency with Solvency II standards in future, which, in our view, will significantly strengthen insurers’ capitalisation and solvency assessment transparency. The market’s financial transparency is gradually improving due to the expansion of public information and the implementation of IFRS.
The sale of a controlling stake in Ipoteka-Bank to Hungary’s OTP Group in 2023 became the first successful transaction under the privatisation programme. Other banks targeted for sale have taken considerable efforts to improve the quality of management and corporate governance, increase transparency of their business operations, and shift to commercially oriented business models. We also note the gradual reduction in the volume of higher-risk subsidised lending by state-owned banks. Such lending programmes have become more targeted and loan terms are now more aligned with market terms than before.
An important development for the insurance sector was the government’s adoption in 2024 of a programme for comprehensive sector transformation. The programme includes mandatory registration of all contracts through a Unified Automated Information System, elimination of paper-only policy issuance and integration with government agency systems, which will support further growth in mandatory insurance coverage. The programme also provides for alignment of the methodology for forming insurance reserves and determining solvency with Solvency II standards in future, which, in our view, will significantly strengthen insurers’ capitalisation and solvency assessment transparency. The market’s financial transparency is gradually improving due to the expansion of public information and the implementation of IFRS.
Regulation Quality Reaches a New Level
The second key factor behind our positive outlook for the bank operating environment is the significant improvement in the quality of regulation and banking supervision by the Central Bank of Uzbekistan (CBU) since the banking reform began. The regulator has adopted a host of measures to strengthen the banking sector and increase its resilience. These actions have included increasing minimum capital requirements for banks, tightening requirements for loan classification and provisioning, as well as the regulatory push to make banks more accurately and actively recognise problem assets on their balance sheets. The CBU has recently published a Roadmap for banking regulation reform for 2025-2028, which envisages such important measures as implementing Basel III capital adequacy standards, harmonising local GAAP requirements for recognising problem assets with international standards, and creating a regulatory framework for implementing the new law on bank resolution and liquidation.