BAKU, Azerbaijan, Mar. 2
By Nargiz Sadikhova - Trend:
Currently, most Kazakh banks have strong loss-absorption capacity, Kazakh Banks Datawatch for 4Q2020 report prepared by Fitch Ratings said, Trend reports citing the Fitch.
The prepared report covers 23 banks, which represent 99 percent of the country's banking assets. The report assesses key data from the banks' regulatory financial statements and disclosures, sourced primarily from the National Bank of Kazakhstan and the Kazakhstan Stock Exchange.
The report said that sector loan impairment charges (LICs) decreased to 0.7 percent (annualised; adjusted for one-offs) of gross loans in 4Q2020 from 1.5 percent in 3Q2020 and 3 percent in 2Q2020.
“We believe that these numbers do not yet fully capture the impact of the coronavirus pandemic-driven economic downturn on sector loan quality and there may be a moderate increase in LICs in 2021. So far, sector asset quality and performance through the crisis is above our initial expectations,” the report said.
Fitch believes most Kazakh banks have strong loss-absorption capacity.
“The sector average ratio of pre-impairment profit to gross loans exceeds 8 percent and was very stable throughout 2020. This is well above the LICs, allowing most banks to post strong profits in 2020, which were largely consistent with 2019,” the report said.
The Fitch also noted that capital and liquidity buffers in the sector are still large, also supporting the resilience of Kazakh banks to stress.
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