Fitch: High returns on equity drive CIS+ banks to make acquisitions abroad

Over the past three years, CIS+ banks have continued to actively acquire other financial institutions, including abroad, as limited growth opportunities in domestic markets and financial resources accumulated through high profitability have encouraged them to expand into new markets, according to Fitch Ratings study titled "What Drives M&A Among CIS+ Banks?", prepared by the agency's analyst Artem Beketov.

Report informs that, according to the study, since the beginning of 2024, Fitch-rated banks in the CIS+ region have completed eight mergers and acquisitions. These include the acquisition of a controlling stake in Uzbekistan's Davr Bank by Azerbaijan's International Bank of Azerbaijan (ABB) OJSC.

In August 2026, ABB, which has a long-term foreign-currency issuer default rating of BB+ with a Stable Outlook, agreed to acquire a 51% stake in Davr Bank. According to Fitch, the target bank"s assets account for approximately 12% of ABB's total assets.

Fitch notes that strong economic growth and high interest rates supported the profitability of banks in the region in 2022–2025. In Azerbaijan, the banking sector's average return on equity (ROE) during this period was 17%. By comparison, the figure reached 32% in Kazakhstan, 25% in Armenia and 24% in Georgia.

As of the end of the first quarter of 2026, the banking sector's Tier 1 capital ratio in Azerbaijan stood at 14%. The figure was 21% in Kazakhstan, 20% in Georgia and 18% in Armenia.

According to the Fitch analyst, high profitability has enabled banks to build up substantial capital and liquidity buffers, allowing them to finance acquisitions of other financial institutions both domestically and abroad.

At the same time, the assets of an acquired bank generally account for no more than 30% of the acquiring bank's assets. As a result, such transactions have a moderate impact on banks' consolidated financial strength indicators and generally do not lead to rating changes.

On August 23, 2026, ABB signed an agreement in Tashkent to acquire a 51% stake in Davr Bank.

On September 10, ABB purchased 51 million ordinary shares in the Uzbek bank in six transactions on the Tashkent Republican Stock Exchange at a price of 32,281.28 Uzbek soums ($2.74) per share. The total value of the stake amounted to 1.65 trillion soums, or approximately $140 million. Based on this price, Davr Bank's entire equity is valued at approximately 3.23 trillion soums (around $280 million).

Davr Bank has been operating in Uzbekistan since September 2001.