ASTANA, Kazakhstan, March 27. Fitch Ratings has affirmed Kazakhstan-based Halyk Bank's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'BBB-' with a stable outlook, Trend reports.
Halyk Bank's long-term IDRs are driven by its 'bbb-' Viability Rating (VR), which is underpinned by its dominant market shares in Kazakhstan and record of robust profitability, as well as solid capitalization and liquidity.
The stable outlook reflects Fitch's view that the bank's credit metrics will remain strong in the medium term.
According to Fitch, Halyk Bank is the largest bank in Kazakhstan (30 percent of sector assets at end-2023) with an exceptionally strong domestic franchise, particularly in corporate lending, and high pricing power. This has historically translated into greater stability of asset quality and earnings through the cycle than domestic peers', which Fitch expects to continue. For these reasons, Fitch rates Halyk Bank one notch above its operating environment score of 'bb+'.
Fitch expects Halyk Bank's loan impairments in retail lending to moderately increase over the medium term as high interest rates continue to weigh on borrowers' debt-service capacity. Annualized loan growth moderated to 18 percent in 2023 (2022: 33 percent), and the rating agency expects it to slow further to around 15 percent in the next two years.
The rating agency assesses market risk on the bank's large bond portfolio (around a quarter of total assets at end-2023) as moderate, as it mostly comprises investment-grade bonds with short- and medium-term duration.
Halyk Bank's common equity Tier 1 (CET1) ratio equaled 19.3 percent at the end of 2023, given its robust internal capital generation capacity. Fitch forecasts the CET1 ratio will remain around the current levels in the next two years, assuming moderate loan growth (Fitch forecasts 15 percent loan growth in 2024) and dividend payout ratios of 50–60 percent.