The ratings agency said the E+ BFSR reflects Gallabank’s visible but limited franchise in the corporate and retail banking segments in Uzbekistan and healthy financial indicators such as profitability and capital adequacy, Thomson Financial reported.

But Moody’s said the rating is constrained by the bank’s risk management and corporate governance practices, which are still at their early stage of development, the significant level of concentration in its loan books, which gives rise to uncertainty over the asset quality, as well as the somewhat volatile operating environment in Uzbekistan.

Moody’s said Gallabank would be unlikely to receive support from either the Uzbek authorities or the bank’s shareholders in a case of distress, therefore the deposit ratings do not incorporate expectation of external support and are based on the bank’s ’B3’ baseline credit assessment, a measure of its intrinsic financial strength that is mapped from the ’E+’ BFSR.

Moody’s said developments that could have positive rating implications include a material strengthening of the risk management function, improved corporate governance practices, a substantial reduction in the loan book concentration, and/or growth in the bank’s franchise.

A downward change in the bank’s ratings, although not very likely at present, could occur in the event of factors such as an increase in the loan book concentration, a material erosion of the bank’s franchise, deterioration in asset quality indicators and a material weakening of capital adequacy ratios, Moody’s said.