Baku, Azerbaijan, June 19
By Elena Kosolapova - Trend:
Standard & Poor's Ratings Services had revised its long-term counterparty credit rating on Kazakhstan-based Tsesnabank to 'B+' from 'B' and affirmed its 'B' short-term counterparty credit rating on the bank, the rating agency reported on June 19. The outlook is stable.
At the same time, the agency raised its Kazakhstan national scale rating on Tsesnabank to 'kzBBB' from 'kzBBB-'.
"The upgrade reflects our view that the systemic importance of Tsesnabank to the Kazakhstan banking system has significantly increased over the past four years. We therefore now classify the bank as being of "moderate" systemic importance in Kazakhstan, rather than "low."," S&P said.
As a result, the counterparty credit rating on Tsesnabank now benefits from one notch of uplift for possible systemic support from the Kazakh government, which S&P classifies as "supportive." The bank's stand-alone credit profile (SACP) remains unchanged at 'b'.
Tsesnabank has advanced its market position to No. 5 among Kazakhstan's 38 commercial banks by assets, with a market share of 7 percent on May 1, 2014, according to the agency. It is currently the third-largest domestic bank by corporate deposits (with clients including many flagship state-owned companies) and the seventh-largest by retail deposits.
The bank's increased importance in the Kazakh banking sector is also reflected in its active participation in the government's development programs for the Kazakh economy, such as the Business Road Map 2020, the Damu Fund's programs for financing small and midsize enterprises (SMEs), and Agrobusiness 2020. Currently, Tsesnabank is one of the top three banks in these programs by loan volume.
Of the largest 10 banks in Kazakhstan, Tsesnabank is the only one to have its headquarters in the capital, Astana. This has supported the bank's visibility in the Kazakh banking system, S&P believes. Tsesnabank had a 19 percent market share in term retail deposits in Astana as of year-end 2013. Astana's growth rates have been the highest in the country, with an increasing number of large Kazakh companies moving there from the city of Almaty, according the agency.
"In our view, this increasing systemic importance means that failure of Tsesnabank would be likely to have a material, but manageable, adverse impact on Kazakhstan's financial system and the real economy. In particular, a default on its senior unsecured obligations could weaken the financial system and limit the supply of credit to the private sector," S&P said.
The stable outlook on Tsesnabank reflects the expectation that the bank's creditworthiness will remain stable in the next 12 months. Notably, the agency expects that Tsesnabank's asset quality will not worsen materially and its liquidity will likely stay at current levels. S&P also expects that shareholders will continue their track record of making regular capital injections to compensate for loan growth that is rising proportionately faster than the bank's retained earnings.
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