Moody's downgrades Kazakh ATF Bank's deposit and debt ratings; negative outlook

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

Moody's Investors Service downgraded the following ratings of Kazakh ATF Bank: long-term local- and foreign-currency deposit ratings to Caa1 from B3; foreign-currency senior unsecured debt rating to Caa2 from Caa1;and foreign-currency junior subordinated debt rating to Ca (hyb) from Caa3 (hyb), the rating agency reported on Tuesday.

Concurrently, Moody's affirmed ATF Bank's E standalone bank financial strength rating (BFSR) and lowered the corresponding baseline credit assessment (BCA) to caa2 from caa1. The bank's Not Prime short-term local- and foreign-currency deposit ratings were affirmed. The outlook on the deposit and debt ratings was changed to negative from stable, whilst the BFSR continues to carry a stable outlook.

Moody's assessment of the issuer's ratings is largely based on ATF Bank's audited financial statements for 2012 and the first half of 2013, prepared under IFRS as well as information received from the bank.

"The downgrade of ATF Bank's ratings reflects the ongoing deterioration of the bank's credit profile as evidenced by the bank's audited first half of 2013 IFRS statement," Moody's said.

ATF Bank's ratings also reflect its relative importance to the banking system as the sixth-largest bank in Kazakhstan by total assets, according to the National Bank of Kazakhstan. Moody's therefore incorporates a low probability of systemic support in the bank's Caa1 deposit ratings, which provides one notch of uplift from its caa2 BCA. However, Moody's does not assume any systemic support in ATF Bank's debt ratings, which reflects the Kazakh government's track record of not providing support to debt holders of systemically important banks in rescue programmes.

In light of the above-mentioned deterioration of the pre-provision income, ATF Bank credit profile might weaken further in the next 12-18 months, i.e., as reflected in the negative outlook on its debt and deposit ratings.

In light of the negative outlook, upward rating pressure is limited. The rating agency notes that any further deterioration in ATF Bank's asset quality and profitability, leading to a further impairment of the bank's capital base, could result in a downgrade of its ratings.

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