Uzbekistan, Tashkent, Oct. 23 / Trend D.Azizov /
Standard & Poor's Ratings Services revised its outlook on Uzbekistan-based Kapitalbank to stable from negative. At the same time, the 'B-' long-term and 'C' short-term counterparty credit ratings were affirmed, the agency reported.
The outlook revision reflects the stabilization and improvement in the bank's liquidity management.
The ratings on Kapitalbank reflect its weak capitalization and provisioning coverage, poorly diversified franchise and lending portfolio, and credit risks in the context of the risky operating environment in the Republic of Uzbekistan (not rated). These negative factors are partly offset by Kapitalbank's good brand recognition and geographic presence in Uzbekistan; adequate core earnings; and good and improved levels of liquidity.
The ratings on Kapitalbank reflect its stand-alone credit profile, with no notches or uplift for potential extraordinary parental or governmental support due to its low systemic importance and uncertainty about whether the bank's shareholders would be able to provide sufficient support in case of need.
Kapitalbank's final beneficiaries are not disclosed publicly and in our view its ownership structure lacks transparency. Our ratings are based on the understanding that the ultimate control over the bank belongs to a limited group of people.
The stable outlook balances the remaining credit weaknesses and market challenges with the bank's more cautious and improved liquidity management.
"Even though the current ratings already reflect some probability of a further weakening in the bank's credit profile, if the bank's liquidity eroded from the currently adequate level and if capitalization decreased from its already weak level, we might lower the ratings," said Standard & Poor's credit analyst Sergey Voronenko.
"An upgrade could result only if the bank demonstrated material and sustainable improvements in its financial and business profiles, mainly in capitalization, asset quality, and lending and funding diversifications. But we currently consider this scenario as unlikely in the near term," the agency reported.
In July this year S & P affirmed long-and short-term credit ratings of "Kapitalbank" at level "B" and "C" with negative outlook assigned in August 2009.
In 2009, the bank's assets increased by 81.5 percent - up to 403.04 billion soums, credit portfolio - by 12 percent, up to 150.36 billion soums, the equity of the bank - doubled up to 42 billion soums in 2009. The bank was created in 2000.
The official exchange rate is 1624.72 soums to $1 Oct. 23.
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