Fitch upgrades Kazakhstan's Kaspi Bank to 'B' and withdraws ratings

Business Materials 29 December 2012 12:46 (UTC +04:00)

Azerbaijan, Baku, Dec. 29 / Trend E. Kosolapova/

Fitch Ratings has upgraded Kazakhstan-based Kaspi Bank's Long-term Issuer Default Rating (IDR) to 'B' from 'B-', and Viability Rating (VR) to 'b' from 'b-'. The Outlook is Stable.

Bank's Short-term IDR was affirmed at 'B', Support Rating - at '5' and Support Rating Floor: at 'No Floor'.

Simultaneously, the agency has withdrawn the bank's ratings as Kaspi has chosen to stop participating in the rating process. Therefore, Fitch will no longer have sufficient information to maintain the ratings, and accordingly will no longer provide ratings or analytical coverage.

"The upgrade of the Long-term IDR and VR reflect Kaspi's strengthened market positions in consumer retail lending and deposit-taking, its improved and currently strong performance and reduced deposit concentrations. The ratings are also supported by the bank's so far satisfactory retail asset quality, currently comfortable liquidity and satisfactory capitalisation, and the broadly favourable operating environment," Fitch said.

However, the ratings also take into account the risks associated with the bank's rapid growth, some uncertainty about how the bank's consumer lending business will perform through the cycle, asset quality weaknesses in the corporate portfolio and the lack of information available to Fitch regarding the bank's ownership structure.

According to Fitch, the bank's credit profile could further benefit from an extended track record of sound performance as the loan book seasons and growth moderates, and improved performance of its corporate and SME books in a supportive economy. A deterioration in performance as the loan book seasons, potentially leading to a weakening of capitalisation, would be negative.

The Support Rating of '5' and Support Rating Floor of 'No Floor' reflect uncertainty about the ability and/or willingness of the bank's shareholders and the Kazakh authorities to provide support in case of need.

Continued increase in the bank's retail deposit market share would raise the likelihood of government support for the bank, in Fitch's view.