S&P assigned to Nurbank (Kazakhstan) credit ratings "B-", "C"

/LONDON CAPITAL MARKETS, Jan 22, 02, The following statement was released by the ratings agency/ - Standard & Poor's today assigned its single-'B'-minus long-term and its 'C' short-term counter party credit and certificate of deposit ratings to Kazakhstan-based OJSC Nurbank (Nurbank). The outlook is stable. The ratings on Nurbank reflect its good financial profile, strict lending controls, and its increasing market share in Kazakhstan. Offsetting these positive factors are concentrations in lending and funding, the bank's short operating history, and the sensitivity of the domestic economy to fluctuations in commodity prices, with some industries outside the oil and gas sectors in need of restructuring. Nurbank's conservative lending policy, established credit evaluation procedures, and good handling of nonperforming loans mitigates this vulnerability. Nurbank is the fourth-largest financial institution in Kazakhstan, with Kazakhstan tenge (KZT) 34 billion ($228 million, at KZT147 to $1) in total assets at Sept. 30, 2001. ROA was 4.31% in the first nine months of 2001, an increase from 3.72% in 2000, as a result of increased interest revenues on growing lending. With a limited branch network, Nurbank remains primarily a corporate bank that relies on wholesale funding, although it is trying to expand its retail- funding base. Along with high concentrations in liabilities, this factor is a weakness in the bank's credit profile. The bank has experienced rapid expansion of its loan portfolio and higher business volumes over the past three years. The main concern for the bank's management is to increase the liabilities' tenures to compensate for the asset-liability maturity gaps over the medium to long term. This is driving the bank to participate in domestic and multilateral funding programs and to access international money markets. Nurbank benefits from its supportive ownership structure, consisting of a number of local companies as well as individuals. Since the bank's change of ownership in 1999, the shareholders have recapitalized the bank regularly, and recently increased the bank's statutory capital to KZT3 billion. The bank's level of capital is good compared with its level of assets and is well above the capital adequacy requirements of the National Bank of Kazakhstan (NBK). In light of the high-risk Kazakh banking environment and the bank's future expansion plans, this level is adequate. OUTLOOK: STABLE The outlook on Nurbank reflects the bank's adequate capitalization and good financial profile. It also takes into account risks connected with the bank's rapid expansion, as well as risks of operating in a country whose economy is dependent on oil and gas production and refining. Therefore, a significant decrease in world oil prices could lead to an economic downturn and increase in problem loans. In addition, the outlook could change to negative if the bank expands without appropriate risk controls in place or if the bank diverges from its strict lending and asset- managing policy. Standard & Poor's believes that the bank has made progress over the past few years in solidifying its business base in Kazakhstan and changing the composition of assets and liabilities to improve profitability, which could result in sustainable business development.