Baku, Azerbaijan, June 6
By Ali Mustafayev – Trend:
S&P Global Ratings said today that it has revised its outlook on Kazakhstan-based AsiaCredit Bank JSC to negative from stable, affirming ‘B-/B’ long- and short-term issuer credit ratings on the bank.
At the same time, the agency lowered its Kazakhstan national scale rating on AsiaCredit Bank to 'kzB+' from 'kzBB-'.
The outlook revision stems from S&P’s concerns regarding the stability of AsiaCredit Bank’s franchise and the bank's ability to sustain its customer base under the deteriorated operating conditions.
“For AsiaCredit Bank, since the beginning of 2018, deposits of legal entities have decreased by 28 percent and individual deposits dropped by 4.3 percent. Although we see signs that client deposits are stabilizing, we still consider the risks of further reduction of the deposit base to be relatively high. We believe that, should the outflows continue, the bank could be forced to look for alternative funding options, for instance, increase its reliance on short-term funds or ask the owners to provide financial support. We note, however, that the bank was able to successfully manage outflows in the past, due to its cautious liquidity management (cash and equivalents represented about 30 percent of total assets as of Dec. 31, 2017). We also note that the bank maintains liquidity ratios well above the regulatory minimum (current liquidity ratio k4 stood at 0.85 with the minimum requirement at 0.3),” S&P said in a message.
The agency also considers that it will be increasingly difficult for AsiaCredit Bank to achieve its targeted profit this year because the challenges related to its customer base could further weaken its pricing power and restrict its ability to increase commission income.
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