Fitch has approved ratings of "Development bank of Kazakhstan" JCS as "BBB-" and "Kazagrofinance" JCS as "BB"

/IRBIS, June 20, 2011/ - Fitch Ratings has confirmed the June 17 long-term Issuer Default ratings ("IDRs") in foreign currency of JSC "Development Bank of Kazakhstan" ("DBK") and JSC "KazAgroFinance" ("KAF") on the levels of "BBB-" and "BB", respectively, according to the press service of Fitch. As stated, the ratings reflect Fitch's view DBK a high degree of readiness of the Kazakh authorities to provide support to the bank in case of need, taking into account the fact that the bank is state property, and in view of its special legal status and important role in implementing policies, on as evidenced by participation in major investment projects. In addition, the agency believes that in the event of default DBK any significant reputational risks for the government in view of the market position of the bank. At the same time, Fitch notes that the outlook on DBK is "Stable", and ratings are unlikely to change even if the long-term issuer default rating of Kazakhstan will be upgraded to "BBB". This reflects the common practice of Fitch's IDR readings the state banks, down from the ratings of the countries, especially in the case of higher ratings. It is noted that DBK has significantly increased foreign borrowing since late 2007, and at the end of 2010 most of the borrowed funds (94%) was obtained from international investors. At the same time there was a reduction of capital adequacy. Thus, the calculated ratio Fitch capital / weighted risks decreased from 24% at end-2009 to 18% at the end of 2010. Loan portfolio quality is also weak, since 27% of all loans referred to problem loans, although it generally corresponds to the situation in other financial institutions in Kazakhstan. Among positive factors, Fitch notes the significant history of support for DBK receiving money from the state. In addition, the BRC currently has a high proportion of liquid assets: Loans and financial leasing accounted for only 36% of total assets at the end of 2010. Given the fact that the nearest large debt repayments scheduled for 2015, currently the bank appears to have a reasonable financial flexibility. At the same time, Fitch notes that may cause pressure on the ratings of DBK downward in the medium term, if the bank will continue the rapid expansion, resulting in the size of its private debt and the balance will become more significant with respect to the positions of the sovereign issuer. Bank debt is currently around 4% of total external debt of Kazakhstan. Long-term IDR & F are on two levels lower than that of BRC, which represents a less important role and relevance of KAF to the economy. In addition, the agency's view about the likelihood of support takes into account the history of defaults of other financial institutions in Kazakhstan in 2009. At the same time, the ratings continue to reflect the KAF moderate probability of support from the state, given that the company is owned by the state, its small size (and hence maintenance costs), and enough stories of financial assistance in the form of contributions of capital. It is noted that asset quality is also poor for KAF. So, problem and restructured loans were 13% and 34% of the portfolio at the end of 2010, respectively. At the same time in late 2010, according to statements from the bank was a substantial capital cushion. The capital adequacy ratio of the first level of national standards was 58%, and as soon as the bank's management expects significant new infusion of capital. Processed rating actions: - Development Bank of Kazakhstan Long-term foreign currency IDR is affirmed at "BBB-", outlook "stable" Short-term foreign currency IDR is affirmed at "F3" Long-term local currency IDR is affirmed at "BBB", the forecast "Stable" Short-term local currency IDR is affirmed at "F3" Support rating: affirmed at '2 " Support Rating Floor: affirmed at "BBB-" Long-term senior unsecured rating is affirmed at "BBB-". - KazAgroFinance Long-term foreign currency IDR is affirmed at "BB", forecast "Stable" Short-term foreign currency IDR is affirmed at "B" Long-term local currency IDR is affirmed at "BB", forecast "Stable" National long-term rating is affirmed at "A (kaz)", forecast "Stable" Support rating: affirmed at '3 " Support Rating Floor: affirmed at "BB". [2011-06-20]