Fitch Ratings affirms Kazakhstan's Halyk Bank at 'BB+'; stable outlook
08.11.07 11:48
/Fitch Ratings, London/Moscow, November 07, 07/ - Fitch Ratings has
today affirmed Kazakhstan-based Halyk Bank's (Halyk) ratings at Long-term
foreign currency Issuer Default Rating (IDR) 'BB+', Short-term foreign
currency IDR 'B', Long-term local currency IDR 'BBB-' (BBB minus), Short-
term local currency IDR 'F3', Individual 'C/D', Support '3' and Support Rating
Floor 'BB+'. The Outlooks for the Long-term foreign and local currency IDRs
remain Stable.
Halyk's Long-and Short-term IDRs and Support rating reflect the moderate
probability of support forthcoming, in case of need, from the Kazakhstani
authorities. This is based on the bank's substantial domestic franchise, and
takes into account the authorities' ability to provide support, as reflected in
the sovereign's Long-term foreign currency IDR of 'BBB' and Long-term local
currency IDR of 'BBB+'. Halyk's Stable Outlooks for its Long-term IDRs
reflect that of the sovereign's Long-term foreign currency IDR.
The Individual rating of Halyk reflects its broad domestic franchise, strong
bottom-line performance, adequate asset quality to date, reasonable liquidity
and low appetite for market risk. However, the ratings also considers the
risks inherent in the bank's rapid loan growth, significant loan concentrations
and heightened credit risks in the current Kazakhstani operating
environment.
"Halyk is less dependent on foreign funding (30% of liabilities at end-H107)
than most other large Kazakhstani banks, has more moderate exposure to
the higher-risk construction/real estate sector (15% of loans) and a lower
proportion of foreign currency lending (45%), which are all relative positives,
in Fitch's view, for the bank's credit profile," says Dmitri Angarov, Associate
Director of Fitch's Financial Institutions Group in Moscow. "In addition, the
bank has benefited from 39% increase of retail deposits in Q307, and has
been able to continue to expand its lending franchise (by 15% in Q307),
while other banks have experienced funding constraints. At present the
refinancing risk is negligible, since Halyk does not face any large-ticket
repayments to end-2008,"says Mr. Angarov.
Nonetheless, Halyk's construction/real estate and foreign currency lending
exposures are still considerable, and the bank could be negatively impacted
by any further deterioration of the credit environment. Continued rapid loan
growth, while other banks are forced to slow down their expansions, could
also represent an additional source of risk for Halyk relative to the rest of
the sector. In addition, the bank's capital ratios are likely decrease from the
acceptable 13.5% tier 1/15.9% total ratios at end-H107 towards the declared
10%/12% target levels. .
Halyk was the third-largest bank in Kazakhstan at end-Q307 with a 12.1%
share of assets, and the largest bank by retail deposits (25% market share)
and branch network. The Almex Group, beneficially owned by the daughter
and son-in-law of President Nazarbayev, own a majority (68.7%) stake,
while institutional and individual investors held a 31.3% stake following the
December 2006 IPO.
Fitch will continue to review the ratings of Kazakhstani banks during the next
few weeks. At the same time, as the agency has previously stated, the IDRs
of the country's seven largest banks (apart from Halyk, Kazkommertsbank,
BB+'/Outlook Stable; Bank TuranAlem, 'BB+'/Outlook Stable; Alliance Bank,
BB-' (BB minus)/Outlook Stable; Bank Centercredit, 'BB-' (BB
minus)/Outlook Stable; ATF Bank 'BB-' (BB minus)/Rating Watch Positive;
Temirbank 'BB-' (BB minus)/Outlook Stable) are underpinned by the
potential for direct or indirect sovereign support. Banks' Individual ratings
could come under pressure if the stand-alone financial strength of
institutions deteriorates, especially if heightened credit risks start to feed
through into asset quality problems.
Contact:
Dmitri Angarov;
Alexei Kechko, Moscow, Tel: +7 (495) 956 9901
Media Relations:
Alla Izmailova, Moscow, Tel: +7 495 956 9903;
Hannah Warrington, London, Tel: +44 (0) 207 417 6298
[2007-11-08]