S&P assigns 'B-/C/kzBB-' ratings to KazInvestBank
Standard & Poor's Ratings Services assigned its 'B-' long-term
and 'C' short-term counterparty credit ratings and 'kzBB-' Kazakh
national scale rating to Kazakhstan-based KazInvestBank (KIB), the
rating agency reported on June 3. The outlook is stable.
"The ratings reflect the structurally high operating risks for a
bank operating primarily in Kazakhstan, as well as our view of
KIB's "weak" business position, "moderate" capital and earnings,
"moderate" risk position, "average" funding, and "adequate"
liquidity, as our criteria define these terms," the agency
said.
The ratings also take into account KIB's focused conservative
growth strategy and good lending diversification by sector, with
low exposure to the volatile real estate and construction sector.
Offsetting these strengths are KIB's modest franchise in the Kazakh
banking sector and loss of competitive position since the 2008
financial crisis, asset quality that is worse than its Kazakh
peers', and low profitability.
The stable outlook on KIB reflects the expectation that the bank
will implement its conservative growth strategy, led by the new
management team and supported by shareholder capital injections.
The agency does not expect a significant reduction in the bank's
higher-than-peer non-performing loans--unless write offs take place
in the next 12-18 months--or a substantial improvement in the
bank's competitive position.
S&P could consider a negative rating action if the bank's
loss-absorption capacity reduced due to smaller-than-planned or
delayed shareholder capital increases, faster-than-planned credit
growth, or creation of additional significant provisions. This
would lead to our RAC ratio declining below 5 percent over the next
12-18 months. In such a scenario, the agency would revise the
assessment of capital and earnings to "weak" from "moderate." A
negative rating action could also occur if the bank experienced a
liquidity shortage, for example, due to the exit of large
depositors. This is not included in the base-case scenario.
S&P does not expect a positive rating action over the next
12-18 months.