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Fitch reveals Kazakhstan's bank sector outlook

Finance Materials 10 December 2018 16:46 (UTC +04:00)

Baku, Azerbaijan, Dec. 10

By Rashid Shirinov – Trend:

Fitch’s expects Kazakhstan's banking sector to be stable in 2019, Trend reports referring to the rating agency’s 2019 Outlook for CIS & Georgian Banks.

“We believe moderate real GDP growth of above 3 percent in 2018-2020 and currently higher oil prices should provide a supportive economic environment for Kazakhstan’s banks,“ reads the report.

However, the sector remains weak as legacy problem loans and non-core assets at some banks materially exceed their equity, according to Fitch.

The rating agency expects the sector clean-up to continue, potentially resulting in new bank failures and revealing significant amounts of unreserved impaired loans in some cases.

“State support was available for larger banks in 2017-2018, although the sufficiency of capital injections is questionable in some cases, while several smaller lenders’ bank licenses were revoked,” Fitch noted.

The rating agency believes that more bank failures are possible in 2019, but further support is likely for larger banks and contagion risks from failures of smaller lenders should be limited.

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