Baku, Azerbaijan, Feb 12
By Elena Kosolapova - Trend: Standard & Poor's Ratings Services has assigned its 'B-' long-term and 'C' short-term counterparty credit ratings to Kazakhstan-based SB JSC TAIB Kazak Bank, the rating agency reported on Feb. 12. The outlook is stable. At the same time the agency assigned a 'kzB+' Kazakhstan national scale rating to the bank.
"Our ratings on TAIB Kazak Bank factor in our view of the structurally elevated operating risks for a bank in Kazakhstan, as evidenced by our 'bb-' anchor, and reflect the bank's "weak" business position, "strong" capital and earnings, "moderate" risk position, "below-average" funding, and "adequate" liquidity, as our criteria define these terms. The stand-alone credit profile is 'b-'," the agency said.
The stable outlook on TAIB Kazak Bank takes into account the expectation that the bank will maintain strong capitalization, supported by the shareholder, and will take advantage of its management team's experience to expand the franchise. But S&P also views operational and execution risks related to the bank's aggressive growth targets and risks stemming from its highly concentrated loan book and funding profile.
The agency could lower the ratings in case of increased credit losses and deterioration of asset quality as a result of poorly managed growth, inappropriate risk systems, or expansion into very risky segments. A decreased commitment of the shareholder to support the bank with capital injections in case of more rapid expansion than is factored into S&P forecasts could have negative implications, as well, because the agency would then question the long-term sustainability of the bank's business model. This could lower projected risk-adjusted capital ratio before adjustments for diversification to less than 10 percent.
Although S&P views the possibility as remote in the next 12 months, the agency could consider a positive rating action if the bank managed to decrease the dependence of its funding profile on related parties and diversify its funding sources.